An overview and breakdown of the financial help provided by the Finance Minister to revive the economy of India from the losses suffered because of the Covid-19 pandemic. The relief comes in the form of launch of various schemes and boost to the existing ones.
The Finance Minister of India announced covid relief packages worth INR 6,28,993 crore to support the Indian economy groaning under the burden of the second wave of the pandemic and forced lockdowns. The entire package includes 17 measures and is to be implemented over several years. This also includes two initiatives which had already been announced – the additional fertilizer subsidy, and free food grain supply to certain vulnerable sections of the society till November 2021 under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
The 17 measures, based on their purpose, have been divided into three categories:
- Economic Relief from Pandemic
- Strengthening Public Health
- Impetus for Growth & Employment
Economic Relief from the Pandemic
There are eight schemes announced by the Finance Minister that fall under this category.
Loan Guarantee Scheme Worth INR 1.10 Lakh Crore for COVID Affected sectors
Under this scheme, additional credit will be provided to businesses. This includes the benefit of guarantee cover and subsidized loans, based on the following proportion:
- INR 50,000 crore for health sector, which will be mainly used for scaling up the health infrastructure, expansion of hospitals and building new facilities in non-metro cities. The guarantee cover will be 50% for expansion & 75% for new projects. However, for aspirational districts, the guarantee cover of 75% will be made available for both new projects and expansion.
- INR 60,000 crore for other sectors, which includes tourism.
Maximum loan admissible under this scheme is INR 100 crore and the guarantee duration is valid upto three years.
Emergency Credit Line Guarantee Scheme (ECLGS)
- Launched as part of the Aatma Nirbhar Bharat Package in May, 2020, the Government has decided to expand the ECLGS, by INR 1.5 lakh crore. Therefore, the scope of ECLGS has now been expanded from INR 3 lakh crore to INR 4.5 lakh crore.
- Limit of admissible guarantee and loan amount has been increased above the existing level of 20% of outstanding on each loan.
Credit Guarantee Scheme for Micro Finance Institutions
This scheme aims to benefit small borrowers served by the Micro Finance Institutions (MFIs) with a focus on lending. Under this scheme:
- Loan guarantees will be provided to Scheduled Commercial Banks for new or existing Non-Banking Financial Company (NBFC)-MFIs or MFIs for loan amount upto INR 1.25 lakh.
- The maximum loan tenure would be three years.
- The guarantee cover is available till March 31, 2022, or till guarantees for a total of INR 7,500 crore are issued, whichever of them is earlier.
- Interest rates will be a minimum of 2% below maximum rates prescribed by the Reserve Bank of India (RBI).
- All borrowers are eligible. This includes defaulters upto 89 days.
Tourist Guides and Stakeholders Scheme
The purpose of this scheme is to provide relief to the people in the tourism sector.
- Under this scheme, working capital and personal loans will be provided to people in tourism sector for the purpose of discharging their liabilities and restarting their businesses.
- It covers 10,700 Regional Level Tourist Guides who are recognised by Ministry of Tourism and Tourist Guides, who are eligible to a loan of INR 1 lakh each.
- It further covers about 1,000 Travel and Tourism Stakeholders (TTS) recognized by Ministry of Tourism, who are eligible to a loan of INR 10 lakh each.
Free One Month Indian Tourist Visa to 5 Lakh Tourists
First 5 lakh tourist visas to visit India will be issued free of visa charge. The benefit is available once per tourist and is applicable till 31st March, 2022, or until 5 lakh visas are issued, whichever is earlier.
Aatma Nirbhar Bharat Rozgar Yojana (ANBRY) Extended
The Government has extended the date of registration under ANBRY from 30th June, 2021, to 31st March, 2022. The scheme was introduced to incentivise employers for creation of new employment and restoration of loss of employment of workers during the pandemic through EPFO. The scheme funds full or partial PF contribution of employees hired under the scheme, subject to the following conditions:
- Employers with establishment strength upto 1,000 employees are eligible for subsidy for new employees who draw monthly wages of less than INR 15,000 for both the employer’s and the employee’s share of contribution.
- While employers with establishment strength upto 1,000 employees are eligible for a subsidy for only employee’s share of contribution.
Additional Subsidy for Di-ammonium Phosphate (DAP) & Phosphatic and Potassic (P&K) Fertilizers
An additional subsidy of INR 14,775 crore has been announced for the farmers using DAP and P&K fertilizers. The subsidy is divided in the following proportion:
- INR 9,125 crore of additional subsidy for DAP fertilizer.
- INR 5,650 crore of additional subsidy for NPK based complex fertilizer.
Free Food Grains under Pradhan Mantri Garib Kalyan Yojana (PMGKY)
The PMGKY, initially launched in 2020, was relaunched in May 2021 to support the poor and needy with food security. Under the scheme, five kg of foods grains will be provided for free to the beneficiaries of National Food Security Act, 2013 (NFSA) till November 2021.
Strengthening of Public Health
Additional INR 23,220 Crore for Public Health
The Finance Minister announced a new scheme for strengthening of public health infrastructure and human resources, besides the support to health sector through credit guarantee scheme. The scheme has an outlay of INR 23,200 crore. The scheme focuses on:
- short term emergency preparedness
- children and paediatric care and availability of paediatric beds
- increasing availability of ICU beds
- oxygen supply at central, district and sub-district level
- availability of equipment and medicines
- access to tele-consultation
- strengthening ambulance services
- enhancing testing capacity and supportive diagnostics
- strengthening capacity for surveillance
- genome sequencing
Impetus for Growth and Employment
- Revival Package for North Eastern Regional Agricultural Marketing Corporation (NERAMAC) The Finance Minister has proposed a revival package of INR 77.45 crore for NERAMAC, which was established to support farmers of North-Eastern states in getting remunerative prices of agro-horticulture produces.
- Boost to National Export Insurance Account (NEIA) An additional corpus of INR 33,000 crore has been proposed for project exports through NEIA. The NEIA Trust’s purpose is to promote Medium and Long Term project exports by extending risk covers to buyer’s credit given by Export-Import Bank of India to less credit-worthy borrowers.
- Boost to Export Insurance Cover The Export Credit Guarantee Corporation (ECGC) has been provided with INR 88,000 crore equity infusion to boost export insurance cover over the next five years.
- Broadband for Villages through BharatNet An additional amount of INR 19,041 has been proposed for the successful implementation of BharatNet in Public Private Partnership model to provide broadband connection in 16 states. This has increased the total outlay under BharatNet to INR 61,109 crore.
- Extension of Production Linked Incentive (PLI) Scheme The PLI scheme tenure has been extended by one year, that is, till 2025-26. The scheme was launched in 2020 to provide incentive of 6% to 4% on incremental sales of goods under specific segments that are manufactured in India.
- Development of Higher Crop Yield Varieties The Finance Minister announced the release of 21 bio-fortified crop varieties which have been developed by Indian Council of Agricultural Research (ICAR). These crops are high in nutrients such as protein, iron and zinc and are tolerant to diseases, pests, insects, drought, salinity, and flooding.
- INR 3.03 lakh crore for Reform-Based Result-Linked Power Distribution Scheme The Union Budget 2021-22 announced a revamped reforms-based, result-linked power distribution scheme to provide financial assistance to electricity distribution companies (DISCOMS) for creation of infrastructure, up-gradation of system, building of capacity and improvement of processes. The total outlay of the scheme is INR 3,03,058 crore; the Finance Minister announced that the Central Government’s share will be INR 97,631 crore.
- Streamlined Process for PPP Projects The Finance Minister announced the formulation of a new policy for the purpose of appraisal and approval of PPP proposals and the monetization of core infrastructure assets. The aim of the policy is to ensure speedy clearance of projects to improve private sector’s efficiency in financing constructions and managing infrastructure.
July 21, 2021