Union Finance Minister Nirmala Sitharaman announced eight measures to mitigate the distress caused by the second wave of the pandemic, as well as to prepare to offset a possible third wave. According to the government, the package will cost Rs 6.29 lakh crore, but it will also include previously announced schemes such as the extension of the free foodgrain program, which alone will cost the exchequer over Rs 93,000 crore.
Sitharaman replied, ‘We will come back with more details about the actual cash outflow. The financial implications of this have been clearly described. It makes a difference when it reaches the ground’. Addressing a press conference, Sitharaman announced a Rs 1.1-lakh crore loan guarantee scheme for Covid-affected sectors, including Rs 50,000 crore for the health sector. With the Aatmanirbhar Bharat Package, she announced the expansion of the Emergency Credit Line Guarantee Scheme (ECLGS) to 1.5 lakh crores from the existing amount of 3 lakh crores.
Microfinance Institutions (MFIs) have been empowered with a new credit guarantee scheme to give loans to small borrowers, where the maximum loan to individuals will be Rs 1.25 lakh at an interest rate 2 percent below the rate prescribed by the Reserve Bank of India. For the tourism sector, financial support will be provided to more than 11,000 registered tourist guides and travel and tourism stakeholders (TTS). TTS will receive a loan of up to Rs 10 lakh, while licensed tourist guides will receive a loan of up to Rs 1 lakh. Additionally, the government will grant 5 lakh free visas to boost tourism. The visas will be for short-term stays of up to one month and will be given once to each foreigner.
Additional funding of Rs 23,220 crore will also be allocated for preparedness, with a focus on pediatric care. Additionally, the budget provided Rs 15,000 crore. An extra corpus of Rs 33,000 crore will be provided to the National Export Insurance Account over five years to underwrite project exports. The Finance Minister announced a proposal to inject equity into Export Credit Guarantee Corporation over five years in order to boost export insurance by Rs 88,000 crore.
BharatNet PPP will provide broadband to each village at a cost of Rs 19,041 crore. She announced an allocation of Rs 3.03 lakh crore in support of a revamped reform-based electricity distribution scheme. The Centre would receive Rs 97,631 crore of this. Public-private partnerships (PPP) and asset financing will have a streamlined process to help speed up project approval, while the productivity-linked incentive (PLI) scheme for large-scale electronics manufacturing has been extended by one year, until fiscal 2025-26. As part of the scheme, manufacturers are given incentives ranging from 4% to 6% on incremental sales of goods manufactured in India.
Efforts to boost the economy
- ECLGS limit raised by Rs 1.5 lakh crore to Rs 4.5 lakh crore
- Free visas for 5 lakh tourists, financial support for the tourism sector
- Proposed policy to fast-track PPP approvals
- The government will invest in ECGC in order to increase export insurance coverage
- Additional funding of Rs 23,220 cr for pediatric facilities in hospitals
- Rs 93,869 cr for the free foodgrain scheme.
- An additional Rs. 19,000 crore for rural broadband connectivity under BharatNet
The Prime Minister said that FM Nirmala Sitharaman’s plans today will enhance public health facilities, especially in underserved areas, and boost private investment in health infrastructure and human resources. Strengthening healthcare facilities for our children is a priority. Providing assistance to our farmers is a priority. Several programs have been announced which reduce their costs, increase their incomes, and promote greater resilience and sustainability of agricultural activities. Small entrepreneurs and self-employed individuals will receive further support to help them maintain and expand their existing business activities.
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A number of initiatives, including financial assistance, are being taken to help those in the tourism industry. Economic activities will be stimulated, production & exports will increase, and jobs will be created. Power Distribution Schemes linked to results and streamlined processes for PPPs and Asset Monetisation illustrate our Government’s commitment to reforms.
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