India planning around $20 billion of new stimulus to boost economy

India is planning to announce a fresh round of stimulus totalling about $20 billion this week to help pull the economy out of its historic contraction, government officials said on Wednesday.

The package would follow Wednesdays earlier announcement of production-linked incentives worth about $27 billion over five years for manufacturers in 10 sectors.

Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and other top officials will finalise the plan on Thursday, said the sources, who asked not to be named.

The Indian economy, which the International Monetary Fund singled out as a global bright spot only a few years ago, contracted a hefty 23.9% in the April-June quarter and is seen contracting over 10% in the fiscal year to March 2021.

Coronavirus cases are still surging in major Indian cities and the country has been adding over 40,000 cases a day.