Prime Minister Narendra Modi’s Rs 21 lakh crore stimulus package has drawn more criticism, this time from global wealth manager, Credit Suisse. In a report, Credit Suisse Wealth Management said that the government’s stimulus package lacks major near-term support for the economy and may not be adequate to restore India’s growth trajectory, news agency PTI reported. The stimulus package, as announced by PM Modi on May 12, was further elaborated by Finance Minister Nirmala Sitharaman in five-tranches, where she outlined the package that was carved out to help the Indian economy beat the slump caused by the coronavirus pandemic.

"India's response to the COVID-19 crisis lacks major or innovative near-term fiscal support, and fails to provide the much-needed impetus to stimulate growth and kick-start economic growth," Jitendra Gohil, Head - Credit Suisse Wealth Management (India Equity Research), said in the report. Credit Suisse said the actual fiscal spending that the Indian government will do is around Rs 2 lakh crore, translating to just 1% of the gross domestic product, indicating that the government is taking fiscal caution in dealing with the pandemic. India’s stimulus package includes monetary measures taken by the Reserve Bank of India as well.

Research and rating firms are already expecting a sharp slump in India’s GDP growth owing to the lockdown that has kept Indians indoors since the last week of March. "With no nominal GDP growth, India's already high debt to GDP ratio (expected to cross 80% in the current fiscal) - a key metric for rating agencies - could increase further and reach to levels that might be of concern for India's credit rating," Gohil said.

Prime Minister Modi and his government has taken the coronavirus crisis and is trying to steer the crisis into an opportunity, aiming for structural reforms, many of which were a part of the stimulus package as announced last week. If the growth does not recover in the next couple of quarters, the country's macro-fundamentals could be at risk of significant deterioration, Gohil said.

Prime Minister Modi and his government has taken the coronavirus crisis and is trying to steer the crisis into an opportunity, aiming for structural reforms, many of which were a part of the stimulus package as announced last week. If the growth does not recover in the next couple of quarters, the country's macro-fundamentals could be at risk of significant deterioration, Gohil said.

Credit Suisse remains defensive on Indian equities with a preference for sectors linked to agriculture, telecoms, information technology, and certain consumer and utility stocks from a three-six month perspective. Gohil said that Indian equity markets could experience a deterioration in investor sentiment. He expects flows from foreign portfolio investors (FPIs) and domestic investors to likely abate in the near term because of the prospects of reduced income levels and corporate profits.