Boost to economy?
Various relief measures announced by the government are expected to support the pandemic-hit stressed sectors
Finance Minister Nirmala Sitharaman announced a slew of relief measures for pandemic-hit businesses and the public on June 28. Apart from expanding some old schemes, newer ones have also been added. The relief package amounts to Rs 6,28,993 crore.
The government has announced a guarantee cover of Rs 50,000 crore out of Rs 1.1 lakh crore to strengthen the health infrastructure, and a provision of Rs 60,000 crore has been made for other pandemic-affected areas. A maximum loan of Rs 100 crore is permissible under the scheme. Interest will be charged at the rate of 7.95 per cent on loans related to the health sector, and 8.25 per cent for other sectors. The government will spend Rs 23,220 crore on health services related to children by March 31, 2022. The availability of oxygen cylinders at the district and sub-district level and facilities like testing capacity and teleconsultation will also be amplified.
The Emergency Credit Line Guarantee Scheme (ECLGS) — launched in May last year — has met 90 per cent of its target of providing a loan of Rs three lakh crore to MSMEs, covering 1.1 crore units. As there are about 6.3 crore MSME units across the country, many units were left out. Therefore, an additional loan of Rs 1.5 lakh crore under ECLGS has been announced further.
Small business, non-banking financial companies (NBFC) and Micro Finance Institutions (MFI) will be given an assistance of up to Rs 1.25 lakh crore in the form of loan, on which interest will be charged by adding a maximum of two per cent on the Bank's Marginal Cost of Funds-Based Lending Rates (MCLR). The tenure of such a loan will be three years and the government will give a guarantee of 75 per cent on it. Borrowers, who have not paid their loan instalment and interest for 89 days, will also be eligible to take advantage of this scheme. Twenty-five lakh people are expected to benefit from this scheme. The government has made a provision of Rs 75,00 crore for this scheme, the benefit of which can be availed till March 31, 2022.
According to the data of World Travel and Tourism, the contribution of travel and tourism to GDP was 6.9 per cent in 2019, which decreased to 4.7 per cent in 2020. Employment in this sector has come down from 4.01 crore to 3.18 crore. Identifying the need to provide immediate relief to strengthen this sector, the government announced to provide a 100 per cent guarantee on loans up to Rs 10 lakh which will be given to 904 registered tourist guides and travel tourism stakeholders affected by the pandemic. 100 per cent guarantee will also be given on loans up to Rs one lakh to 10,700 licensed tourist guides. In order to boost foreign tourism, one-time visas will be issued free of cost to the first five lakh foreign tourists till March 31, 2022.
The validity of the Self-reliant India Employment Scheme — launched last year — has been extended till March 31, 2022. Under this scheme, the government pays the provident fund of employees and companies earning less than Rs 15,000 salary. The government has set a target of spending Rs 22,810 crore on this scheme to benefit about 58.5 lakh people.
The government has given an additional subsidy of Rs 14,775 crore to farmers, out of which a subsidy of Rs 9,125 crore has been given on DAP fertilizers, while a subsidy of Rs 5,650 crore has been given on NPK fertilizers.
To help the poor, the government had announced the Pradhan Mantri Garib Kalyan Anna scheme on 26 March 2020 last year and its benefit was given to the poor for the first time from April to June 2020. Later the duration of this scheme was extended till November 2020. In the financial year 2020-21, Rs.1,33,972 crore was spent on this scheme. The scheme was restarted in May 2021. Under this scheme, about 80 crore people will be given 5 kg foodgrains free of cost till November 2021, which will cost around Rs.93,869 crore this year. About Rs 2,27,841 crore will be spent on this scheme together last year and this year.
Exports have also been negatively affected due to the pandemic, registering a decline of 7.3 per cent during FY 2020-21, amounting to a loss of USD 290.6 billion. Therefore, the government will aid Rs 33,000 crore to exporters through National Export Insurance Account (NEIA) and will also provide export insurance cover of Rs 88,000 crore to accelerate exports. About 30 per cent of the country will benefit from this provision.
Under the Bharatnet Broadband Scheme, Rs 19,041 crore will be spent to provide internet to every village. The objective of this scheme is to provide the facility of broadband connectivity to all the villages of the country. It is worth noting that till May 31, 2021, out of 2.50 lakh gram panchayats, the facility of broadband connectivity has been provided to 1,56,223 villages.
Rs 3.03 lakh crore will be given for reforms in the power sector to strengthen power distribution-related infrastructure. Under this scheme, 25 crore smart meters, 10 thousand feeders and LT overhead lines will be installed for smooth transmission of electricity to up to four lakh km. The government will come out with a new policy for Public-Private Partnership (PPP) projects and asset monetization, which will expedite the implementation of PPP projects. The current process is very lengthy and requires multiple levels of approvals. Asset monetization policy will help to sell off various properties which are kept idle for a long time.
The second wave of the pandemic hit even before the full recovery from the first wave, affecting the ongoing corrective measures in the economy and bringing economic activities to a standstill. Also, many employment opportunities were reduced. Health, tourism, MSMEs, farmers etc. were most affected by the second wave. The announced relief package is expected to improve the economic condition of affected sectors.
Views expressed are personal