Third time is the charm. But in economics, it also suggests dismal failure of the first two attempts. Can the finance minister pull the country out of the crisis?
Finance Minister Nirmala Sitharaman, in a press meet on Thursday, announced another ‘colossal’ stimulus package to revive the Indian economy. Ms. Sitharaman began by highlighting the achievements of preceding packages followed by the brand new addition worth ₹2,64,080 crores to the series of stimulus packages. While briefing, FM stated that the government plans to spend ₹29,87,641 crore on the revival mission of Indian economy which includes ₹12,71,200 crores from RBI. The figure is equal to 15 percent of the total GDP of India.
Watch: Finance Minister of India Nirmala Sitharaman announces a third stimulus package
The Indian government plans to spend ₹29,87,641 crore on the economic revival mission, the figure equating to 15 percent of India’s total GDP.
Here is the list of measures that aims to provide bulwark against pandemic.
Atmanirbhar Bharat Rozgar Yojna
Atmanirbhar Bharat 3.0, is focused on creating jobs in the Indian market. Government plans to encourage more recruitment in the formal sector by providing subsidies to the organizations registered with EPFO. To explain it in layman’s terms, let’s answer one question at a time.
What is the Scheme?
Under Atmanirbhar Rozgar Yojana, organizations registered with EPFO will be given subsidy for employing people on the monthly wages of less than ₹15,000 per month. This also includes hiring people who lost their jobs between March to September, 2020. The condition is, these employees should be recruited between October 1, 2020 to June June 30, 2021.
What is the Catch?
Companies that aim to avail the benefit of the scheme need to hire at least 2 such employees if their total number of employees are less than 50. For companies with total workforce strength of more than 50, the minimum recruitments should be 5.24 percent of the EPF contribution for such employees for the two years shall be paid by the government for an organization with less than 1000 employees. If the number of employees exceeds 1000, subsidy amounts to 12 percent of the EPF contribution.
What is the Subsidy?
Under FM Nirmala Sitharaman’s stimulus packages, the government shall contribute the EPF contribution of the eligible employees for two years which is originally paid by the organizations.
How long does the scheme last?
The scheme begins retrospectively from October 1, 2020. Organizations established with EPFO can avail the benefits of the scheme till 30th June 2021. These subsidies will be directly credited in EPFO accounts linked to the Aadhaar.
How many organizations and employees is the scheme expected to cover?
The scheme is expected to cover more than 95 percent of all the organizations in the formal sector and 65 percent of employees there.
The Emergency Credit Liquidity Guarantee Scheme, which is a non-collateral fund-based working capital term loan, has been extended till March 31, 2021, for a few sectors. As identified by the Kamath Committee, 26 stressed sectors plus the healthcare sector will be provided one year moratorium and four years of repayment. Entities who have outstanding credits of ₹50 crore to ₹500 crore will be eligible for the extended scheme. Additional credit for up to five years with one year moratorium will be provided to the entities with past dues of 30 days as of February 29, 2020.
Product Linked Incentive (PLI) Scheme
The scheme to boost manufacturing which was earlier announced for three sectors is now extended for ten prime sectors. FM Sitharaman said, “So now, 13 sectors are part of the PLI scheme. It covers sunrise sectors, labor-intensive sectors and those sectors through which India hopes to link to the global value chain. I hope this will give a big boost to the Indian economy and domestic employment.”
PM Awas Yojana (Urban)
PMAY-Urban is being defined by the finance minister as a job creator for almost 78 lakh people, further multiplying the benefits by boosting cement and steel demand. The scheme boasts of an additional outlay of ₹18,000 crore which extends beyond the proposed ₹8,000 crore in the Budget announcement earlier.
Relief for builders and home buyers
Section 43 CS of the Income Tax Act provides a differential of 10 percent between the circle rate and the agreement value of the property. The stimulus package introduced by FM Sitharaman increases the differential to 20 percent till June 30, 2021. The benefit applies on the residential units with maximum value of ₹2 crore. The plan aims to boost real estate purchase by the middle class and reduce clear the pending inventory.
NIIF equity infusion
National Investment and Infrastructure Fund, which is the first ever fund set up by the government for sole infrastructure investment, attracts a plethora of funding for the infrastructural activities. Therefore, the government plans to infuse equity amounting to ₹6,000 crores to the debt platform of NIIF. This will invite private equity. NIIF itself has invested ₹2,000 crore in its debt platform.
Subsidy on fertilizers
Subsidies worth ₹65,000 crore will be provided to the farmers to increase the production. Finance minister aims at increasing the consumption from 500 lakh metric tons in 2016-17 to 673 lakh metric tons in 2020-21.
PM Garib Kalyan Rozgar Yojana
Another increase in the outlay of existing plans comes from PM Garib Kalyan Rozgar Yojana. This outlay amounts to ₹20,000 crore. Earlier, a stimulus of ₹61,000 crore for MNREGA and ₹40,000 crore for Atma Nirbhar Bharat 1.0 was announced out of which, ₹73,504 is already spent which led to employment of 251 crore person days in the informal sector according to Ms. Sitharaman.
For Exim Bank
As a measure to boost export trade, an amount worth ₹3,000 crore will be given to the EXIM bank which is aimed at promoting Line of Credit scheme.
Capital and Industrial Expenditure
The finance ministry aims at boosting capital and industrial expenditure by introducing additional infusion of ₹10,200 crore. This has a multiplier effect and is a massive source of generating employment.
R&D for Covid-19 Vaccine
₹900 crores have been dedicated to research and development of the vaccine for coronavirus. Under the Suraksha mission, the money shall be given to the Department of Biotechnology for research and the amount does not include the logistics and cost of preparing a vaccine. It was an inevitable expenditure under the stimulus package introduce by FM Nirmala Sitharaman.