# Business

Fitch thinks stimulus isn’t enough with context to reopen economy

Fitch said the 100 per cent guarantee for MSME loans and farm support schemes were the two main highlights from the announcements.

PTI | New Delhi | May 15, 2020 1:35 pm

Fitch thinks stimulus isn’t enough with context to reopen economy

Fitch Ratings on Thursday said the safe reopening of economy will be key to recovery of non-bank financial institutions (NBFIs).

In a statement on the stimulus measures announced by Finance Minister Nirmala Sitharaman, Fitch said the 100 per cent guarantee for MSME loans and farm support schemes were the two main highlights from the announcements.

Both are fairly significant in size and will help to support the more vulnerable borrower segments for the NBFIs. The NBFC/MFI debt guarantee schemes target the right issues but are not large enough to address the sector’s funding strains, it added.

The government on Wednesday announced about Rs 6 lakh crore package comprising Rs 3 lakh crore of collateral-free loans for small businesses and a Rs 30,000 crore lifeline to non-bank and housing finance companies.

On Thursday, it announced a Rs 3.16 lakh crore package comprising free foodgrains for migrant workers, Rs 2 lakh crore concessional credit to farmers and working capital for street vendors in a bid to help those hit hard by the nationwide lockdown.

Ultimately, however these measures can only serve to prop up the segments that are under distress. The safe reopening of the economy more than anything else will be the key to recovery for the NBFIs, Fitch said.

A nationwide lockdown to contain the spread of COVID-19 disease is in place since March 25. The lockdown date has been extended twice and will now scheduled to end on May 17.