By: DIPANKAR CHAKRABORTY, Senior Correspondent, The Statesman, New Delhi
India’s Finance Minister Mrs. Nirmala Sitharaman’s 17-point economic relief package worth Rs. 6,28,993 crore, could not have come at a more opportune time.
Amid receding cases of Covid-19 infections and a pro-active vaccination drive across the country, the move is expected to significantly inject the domestic sectors with a new growth stimulus. More significantly, the package is likely to provide the necessary cushion to the economy against the possible third wave.
According to the Finance Minister, the package is aimed at supporting the Indian economy in its fight against the Covid-19 pandemic. The measures announced by Mrs. Sitharaman seek to provide relief to various sectors of the economy hit by the second wave of the COVID-19 pandemic. Another objective is to prepare the health systems for emergency response and provide an impetus for growth and employment in the country.
The economic relief package is the first one to come after the second wave of the covid 19 pandemic. It includes Rs 1.1 lakh crore loan guarantee scheme for Covid hit sectors of the economy. An additional Rs 1.5 lakh crore has been earmarked for Emergency Credit Line Guarantee Scheme.
A maximum loan of Rs 100 crore will be given with a capped interest rate of 7.95 per cent for healthcare projects. The guarantee will be provided for three years. ‘Without a guarantee, it would have cost 10 -11 per cent,’ Mrs. Sitharaman said. She added that the interest for other sectors had been capped at 8.25 per cent.
Through the Credit Guarantee Scheme, the central government aims to facilitate loans to 25 lakh individuals via Micro Finance Institutions (MFIs). A completely new scheme, it aims to benefit the smallest of the borrowers being served by a network of Micro Finance Institutions. The government also plans to provide guarantee to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs or MFIs on lending up to Rs 1.25 lakh to approximately 25 lakh small borrowers.
In a significant boost to the tourism sector, the government has decided to provide financial support to more than 11,000 Registered Tourist-Guides/ Travel and tourism stakeholders.
In accordance with the new Loan Guarantee Scheme for COVID-hit sectors, working capital and personal loans will be provided to 10,700 Regional Level Tourist Guides and about 1,000 Travel and Tourism Stakeholders (TTS) recognized by the Ministry of Tourism.
To promote employment generation, the Aatma Nirbhar Bharat Rozgar Yojana has been further extended till 31st March 2022. The government has decided to expand the Emergency Credit Line Guarantee Scheme (ECLGS), launched as part of Aatma Nirbhar Bharat Package in May 2020, by Rs 1.5 lakh crore. Similarly, to ensure continuity and momentum in the agriculture sector, the provision of an additional subsidy of Rs 14,775 crore for DAP & P&K fertilizers has been made.
Especially, keeping in mind the reports about the likely impact of the third wave of Covid 19 on children, the Finance Minister provided for Rs 23,220 crore extra for strengthening of the public health sector ‘with emphasis on children and pediatric care/pediatric beds’.
Mrs. Sitharaman said the health sector component is aimed at up-scaling medical infrastructure targeting underserved areas. Guarantee cover will be available both for expansion and new projects related to health/medical infrastructure in cities, she said.
Rs 88,000 crore for boosting Export Insurance Cover – Rs 19,041 crore for taking broadband to each village through BharatNet PPP Model- Extension of Tenure of PLI Scheme for Large Scale Electronics Manufacturing till 2025-26 and Rs 3.03 lakh crore for Reform-Based Result-Linked Power Distribution Scheme are some of the other measures.
The implication of the package on the 2021-22 Budget, experts say, is likely to be minimal at around rupees 1,18,390 crores. This will be nearly 0.5 percent of the GDP.
All these measures are aimed at stimulating the general health of the economy and shielding it against any adverse impact of the pandemic in the coming days. Some economic pundits believe that more such stimulus packages will be required to strengthen the economy for the remaining part of the fiscal year.