Finance Minister announces new stimulus package worth Rs. 2.65 Lakh Crore
Hudaif (The Jaihind Express Web Desk)
Union finance minister Nirmala Sitharaman Sitharaman said increased energy consumption, a rise in the purchasing managers' index, improved bank credit and a stock market surge all suggested stimulus measures taken so far had begun to help the economy bounce back. The size of the stimulus being provided by the government, as part of the 12 announcements made under "Atmanirbhar Bharat 3.0", amounts to Rs 2.65 lakh crore (around 15% of national GDP), India's economy is seeing a strong recovery taking root and announced a series of new measures to provide further boost to Covid-hit economy".
Centre's last package: The government's last stimulus package in May this year largely failed to soften blow of the strict coronavirus lockdown as it focused on providing liquidity and collateral-free credit for small businesses but with little actual spending. That package also left out badly hit sectors such as tourism, hospitality and aviation.
Economic front: The Indian economy, which the International Monetary Fund (IMF) singled out as a global bright spot only a few years ago, contracted a hefty 23.9 per cent in the April-June quarter and is seen contracting over 10 per cent in the fiscal year to March 2021.
Recession: India will enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the Covid-19 pandemic, as per an RBI official. "India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 2020-21 likely to record the second successive quarter of GDP contraction," as per the article titled 'Economic Activity Index', authored by Pankaj Kumar of the Monetary Policy Department.
Sitharaman said increased energy consumption, a rise in the purchasing managers' index, improved bank credit and a stock market surge all suggested stimulus measures taken so far had begun to help the economy bounce back.
The size of the stimulus being provided by the government, as part of the 12 announcements made under "Atmanirbhar Bharat 3.0", amounts to Rs 2.65 lakh crore (around 15% of national GDP), Sitharaman stated.
Here are the key points of new stimulus package:
1) Finance minister Sitharaman announced a new 'Atmanirbhar Bharat Rozgar Yojana' to incentivize job creation. Beneficiaries under the new scheme include any new employee joining employment in EPFO registered establishments on monthly wages less than Rs 15,000. If new employees of requisite number are recruited from October 1, 2020 to June 30, 2021, the establishments will be covered for next two years.
2) Emergency Credit line Guarantee Scheme (ECLGS) has been extended till March 31, 2021. Also, tenor of credit under ECLGS 2.0 to be five years, including one year moratorium on principal repayment.
3) Rs 1.46 lakh crore boost manufacturing sector with production-linked incentive for 10 sectors such as mobile manufacturing, electronic components and pharma. This is expected to give a significant boost to economic growth and domestic employment.
4) Rs 18,000 crore additional outlay for PM Awaas Yojana (PMAY-Urban). This will help 12 lakh houses to be grounded and 18 lakhs to be completed.
5) Support for construction and infrastructure - relaxation of earnest money deposit (EMD) and performance security on government tenders. Performance security on contracts to be reduced to 3% instead of 5 to 10%. Also, END will not be required for tenders.
6) Demand booster for residential real estate sector with income tax relief for developers and home buyers.
7) Rs 1.10 lakh crore platform for infra debt financing with Rs 6,000 crore equity infusion in NIIF debt platform.
8) Extending support to the agriculture sector, Rs 65,000 crore has been provided for subsidised fertilizers.
9) additional outlay of Rs 10,000 crore under PM Garib Kalyan Rozgar Yojana will be provided in the current financial year. It can be used for schemes including MGNREGA and PMGSY.
10) Rs 3,000 crore will be released to EXIM bank for promotion of project exports through lines of credit.
11) 10,200 crore additional budget outlay will be provided towards capital and industrial expenditure.
12) Rs 900 crore provided for Covid Suraksha Mission for research and development of Indian vaccine to department of biotechnology.
With input from trusted sources