The cabinet has cleared the ordinance on insolvency and bankruptcy code (File photo)

The contours of a second economic stimulus will take some time to devise, some cabinet ministers have told NDTV on condition of anonymity. The reason, they suggest, is that in the middle of a pandemic, the government is uncertain how things will pan out over the next few months.

The demands from all sections of industry -- be it small or medium scale -- and various other sectors of the economy, are huge and the government at present is not flush with funds.

The cabinet has cleared the ordinance on insolvency and bankruptcy code, which would not allow any company to go into insolvency or bankruptcy for the next six months or a specified period.

It has also decided to withhold the 4 per cent hike in dearness allowance and all other hikes in this financial year. It might consider giving arrears next year.

Prime Minister Narendra Modi, finance minister Nirmala Sitharaman, and their offices have been in constant touch, discussing various aspects of the economic stimulus that is required and its modalities.

Even states have been demanding an amendment in the fiscal responsibility and budget management Act FRBM for increasing the states' obligations of keeping the fiscal deficit between 3 per cent and 5 per cent.

The Centre has already projected the fiscal deficit at 3.5 per cent. Many experts say it will be impossible to achieve in the present scenario, as the economy was in a bad situation even before the coronavirus struck.

When the chief ministers have the videoconference with the Prime Minister for the fourth time on Monday, those from the opposition are expected to demand a better financial package. So far, the Centre has met all such demands with silence.