Union Finance Minister Nirmala Sitharaman has announced 12 key measures as part of the Central Government’s stimulus to the economy under Aatmanirbhar Bharat 3.0. The net stimulus announced on Thursday by the country’s full-time woman finance minister amounts to Rs 2.65 trillion.
Addressing mediapersons in New Delhi on Thursday, Sitharaman also informed that the total stimulus announced by the government and Reserve Bank of India (RBI) to date to help the nation tide over the COVID-19 pandemic induced recession worked out to Rs 29.87 trillion, which is 15 per cent of the country’s GDP. Out of this, a stimulus worth 9 per cent of GDP has been provided by the government.
Following the announcement, Prime Minister Narendra Modi tweeted from his official handle, “Today’s Aatmanirbhar Bharat Package continues our efforts to help all sections of society. These initiatives will help in creating jobs, alleviate stressed sectors, ensure liquidity, boost manufacturing, energise real-estate sector & support farmers.”
Finance Minister’s 12 Key Announcements
1. Aatmanirbhar Bharat Rozgar Yojana
A new scheme will be launched to incentivise job creation during the COVID-19 recovery period. If the Employees’ Provident Fund Organisation (EPFO)-registered establishments take in new employees without EPFO numbers or those who lost their jobs earlier, the scheme will benefit those employees. The scheme will be retrospectively effective from October 1, 2020.
2. Emergency Credit Line Guarantee Scheme Extended
The Emergency Credit Line Guarantee Scheme for micro, small and medium enterprises (MSMEs), businesses, MUDRA borrowers and individuals who have taken loans for business purposes, has been extended till March 31, 2021. A credit guarantee support scheme is being launched for healthcare and 26 other sectors under stress due to the COVID-19 pandemic. Entities will get additional credit up to 20 per cent of outstanding credit, where repayments can be done in five years, with a one-year moratorium and four years repayment.
3. Production Linked Incentives Worth Rs 1.46 Trillion for 10 Champion Sectors
This scheme will likely help boost the competitiveness of the domestic manufacturing sector to especially help it compete with China. It will give a big boost to the economy, investment, exports and job creation. A total amount of nearly Rs 1.5 trillion has been earmarked across sectors for the next five years.
4. Rs 180 billion Additional Outlay for Pradhan Mantri Awaas Yojana-Urban (PMAY-U)
This is over and above Rs 80 billion already allocated this year and will help ground 1.2 million houses and complete 1.8 million houses. It will create additional 7.8 million jobs and improve the production and sale of steel and cement, resulting in a multiplier effect on the economy.
5. Support for Construction & Infrastructure
To provide ease of doing business and relief to contractors whose money otherwise remains locked up, performance security on contracts will be reduced to 3 per cent. Earnest Money Deposit (EMD) for tenders will be replaced by bid security self-declaration. The relaxations will be effective till December 31, 2021.
6. Income Tax relief for Developers & Home Buyers
The differential between circle rate and agreement value in real estate income tax is being hiked from 10 to 20 per cent. This is for the primary sale of residential units of up to Rs 20 million from the date of announcement of this scheme till June 30, 2021. The income tax relief will provide an incentive for the middle class to buy homes.
7. Platform for Infra Debt Financing
The Central Government will make Rs 60 billion equity investment in the debt platform of the National Investment and Infrastructure Fund (NIIF), which will help the infrastructure specific investor fund to raise Rs 1.10 trillion by 2025 for financing infrastructure projects.
8. Support for Agriculture
As fertiliser consumption is going up significantly, an increased supply of the commodity will ensure that the forthcoming crop seasons are not hit by shortages.
9. Boost for Rural Employment
An additional outlay of Rs 100 billion is being provided for the Pradhan Mantri Garib Kalyan Rozgar Yojana. Funds can be used for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) or for the Gram Sadak Yojana to help accelerate the rural economy.
10. Boost for Project Exports
A Rs 30 billion boost to be given for project exports through assistance extended by India to developing countries under the Indian Development and Economic Assistance (IDEAS) Scheme. This will help EXIM Bank facilitate these lines of credit development assistance activities and promote exports from India.
11. Capital and Industrial Stimulus
A Rs 102 billion additional budget stimulus will be provided for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy.
12. R&D Grant for COVID-19 Vaccine
Rs 9 billion is being provided to the Department of Biotechnology for research activities related to COVID-19 vaccine development. This does not include the cost of vaccine or logistics for its distribution, which will be provided separately.