Fiscal stimulus refers to government measures designed to boost aggregate economic demand and accelerate growth through increased public expenditure, tax cuts, or direct transfers to households and businesses. In India, fiscal stimulus is deployed during economic downturns or crises — the most prominent recent example being the ₹20 lakh crore Atmanirbhar Bharat package announced during the COVID-19 pandemic in 2020. Fiscal stimulus can take the form of increased infrastructure spending (capital expenditure), direct benefit transfers to low-income households, corporate tax reductions to boost investment, or production-linked incentive (PLI) schemes to attract manufacturing. The efficacy of fiscal stimulus depends on the fiscal multiplier — the extent to which each rupee of government spending generates additional economic activity. For Indian equity investors, fiscal stimulus announcements — particularly those focused on infrastructure and manufacturing — are major positive catalysts for capital goods, construction, cement, and steel sector stocks.
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