IN a first set of measures to mitigate the economic impact of the devastating second Covid wave, Finance Minister Nirmala Sitharaman announced a series of steps aimed to push credit off-take in priority areas such as health infrastructure and the severely hit tourism sector by providing interest-rate concessions.
Alongside a move to expand the scope of the Emergency Credit Line Guarantee Scheme — for small and medium firms — from Rs 3 lakh crore to Rs 4.5 lakh crore, she announced a credit guarantee scheme amounting to Rs 50,000 crore to ramp up healthcare infrastructure beyond the eight major metros. And a credit guarantee of Rs 60,000 crore for other sectors impacted by Covid.
An outlay of Rs 23,200 crore to be immediately made available to the Health Ministry with special focus on paediatric health infrastructure across the country was also announced. Other measures include steps to boost the tourism sector, including credit guarantee loans to tourism stakeholders and guides and free visas to 5 lakh tourists this year.
While Sitharaman pegged the financial impact of these measures — which included many announced earlier – at Rs 6,28,993 crore, the direct stimulus is limited to three main initiatives.
For now, the cash outgo on these new announcements is estimated as under Rs 20,000 crore. This includes the Central share of Rs 15,000 crore on public health; Rs 100 crore on free visas; and Rs 77 crore on revival of North Eastern Regional Agricultural Marketing Corporation.
Announcements amounting to Rs 2.67 lakh crore are related to credit guarantee schemes; Rs 1.21 lakh crore of economic relief is related to insurance cover for exports — project and merchandise.
In a series of tweets, Prime Minister Narendra Modi said the measures will help stimulate economic activities, boost production and exports, and generate employment.
The past announcements included: fertiliser subsidy worth Rs 14,775 crore; free foodgrain under Pradhan Mantri Garib Kalyan Anna Yojana (Rs 93,869 crore) and financial cost of reform in power distribution (Rs 97,631 crore) which was a budget announcement, made earlier this calendar.
Besides, the FM also announced Rs 19,041 crore for Bharatnet to cover all gram panchayats across the country.
Under the health credit scheme, banks will provide credit to private hospitals to expand or create new health facilities beyond the top eight cities. While the maximum amount of the loan has been set at Rs 100 crore, the three-year interest has been capped at 7.95 per cent.
The FM announced an outlay of Rs 23,200 for public health with focus on enhancing paediatric health infrastructure – the Central share would be Rs 15,000 crore.
Under the emergency credit scheme, loans amounting to Rs 2.73 lakh crore have been sanctioned and Rs 2.1 lakh crore has been disbursed.
In another credit guarantee scheme, the government offered to facilitate credit flow to 25 lakh borrowers of micro finance institutions. The FM said that the government would provide a guarantee to scheduled commercial banks for loans to NBFCs-MFIs for on lending up to Rs 1.25 lakh each to 25 lakh small borrowers.
The government said that the focus will be on fresh lending and not repayment of old loans. Stating that default up to 89 days will be covered, Sitharaman said, “Stressed loans will also be covered, only NPAs would not be covered.”
For the tourism sector, the government announced loans up to Rs 10 lakh – with 100 per cent guarantee — for travel and tourism stakeholders recognised by the Ministry of Tourism and Rs 1 lakh for licenced tourist guides.
No processing charges and no additional collateral will be required. This is expected to cover 10,700 regional level tourist guides recognised by the Ministry of Tourism along with tourist guides recognised by state governments and about 900 travel and tourism stakeholders recognised by the ministry.
The government also announced free visas for the first 5 lakh tourists after issuance of visas is restarted. The benefit will be available only once per tourist till March 31, 2022 or till 5 lakh visas are issued, whichever is earlier. This measure is estimated to have a financial implication of Rs 100 crore.
The government also extended the Atmanirbhar Bharat Rozgar Yojana, launched in October last year to encourage employment generation, by nine months until March 31, 2022.
Around 21.42 lakh people have benefited from the scheme until June 18, 2021, with a total outgo of Rs 902 crore. The beneficiaries are spread around 79,577 establishments.
Under ABRY, the government had announced crediting EPFO both the employees’ share (12% of wages) and employers’ share (12% of wages) of contribution payable for establishment strength up to 1,000 employees and giving a salary of up to Rs 15,000 a month.
For establishments having more than 1,000 employees with Rs 15,000 per month salary, only employee’s share (12% of wages) is credited by the government to the EPFO.
For the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which provides free foodgrains to over 80 crore beneficiaries covered under the National Food Security Act (NFSA), the Centre will spend Rs 93,869 crore this year to provide 5 kg of food grains per month free of cost to over 80 crore people during May-November.
Here’s what all were announced:
# Rs 50,000 crore for health sector. A guarantee coverage of 50% for expansion of health related projects and 75% for new projects.
# A 50% guarantee coverage for aspirational districts in case of both expansion and new projects.
# Up to Rs 100 crore loan at 7.95% to health sector.
ECONOMIC RELIEF MEASURES announcements by Hon. FM @nsitharaman
Thread of All Measures
• Health Sector pic.twitter.com/o4e6Jqr9co
— Office of Mr. Anurag Thakur (@Anurag_Office) June 28, 2021
# # Rs 23,220 crore to be provided for paediatric care/paediatric beds at hospitals.
# As many as 25 lakh people will be benefitted under ECLGS. A maximum Rs 1.25 lakhs amount will be lent to the smallest borrowers by micro-finance institutions. “Focus is on new lending & not on repayment of old loans,” Sitharaman added.
# Government will also extend Atmanirbhar Bharat Rozgar Yojana to foot employer, employee’s share of post-retiral benefit of new hires by private companies
# Free foodgrain to poor till November 2021 to take total cost of Pradhan Mantri Gareeb Kalyan Anna Yojana to Rs 2.27 lakh crore
# Additional Rs 14,775 cr fertilizer subsidy to be provided over and above Rs 85,413 cr budgeted.