While the end to the pandemic is nowhere in sight, the wait for a fresh stimulus package is finally over for Indians.
In her address to the media today, Finance Minister Nirmala Sitharaman announced Atmanirbhar 3.0 stimulus package to boost the economy following the outbreak of COVID-19. Will these measures help pull the economy out of its worst contraction yet? Take the poll below and let us know.
Here are all the major announcements made by the Finance Ministry today:
Outlay of stimulus package announced till date
The size of the stimulus being provided by the government, as part of the 12 announcements made today under Aatma Nirbhar Bharat 3.0, amounts to ₹ 2.65 lakh crore, Finance Minister Nirmala Sitharaman announced today as she presented the following data.
-Nirmala Sitharaman announced sector-specific measures, particularly for the sectors worst affected by the pandemic.
-All measures announced in stimulus package are showing progress the FM said.
-15% of GDP given as stimulus package. The government has announced a stimulus package worth Rs 2,65,080 crores today. The overall cost of the packages announced till date stands at Rs 29,87,641 the FM announced.
-FM said that major economic indicators suggest recovery in economy. She highlighted FDI inflow, GST collection, electricity consumption, other headline indicators, pointing towards recovery in economy.
-Revised up GDP forecast for India indicates that Indian economy is moving in positive direction the FM said. She also added that Moody's reassessed a lesser contraction in the economy this year, indicating a correction happening in a positive direction for India.
-Anurag Thakur said, ‘the mood of the country and revised estimates of Moody's, both indicate strong signs of recovery’.
-Emergency credit line guarantee, which is a government guaranteed loan, has further been extended to 31st March 2021.
-Under Emergency Credit Liquidity Guarantee Scheme, a total amount of ₹ 2.05 lakh crore has been sanctioned to 61 lakh borrowers, out of which ₹ 1.52 lakh crore has been disbursed: Finance Minister
-Rs 900 crore for research and development for Covid vaccine. The money will go to the department of biotechnology for research purposes.
The governmnet announced Rs 900 crore for research and development for Covid vaccine. The money will go to the department of biotechnology for research purposes.
-28 states have been brought under #OneNationOneRationCard scheme.
-Around 14 lakh loans have been sanctioned under #PMSVANidhi scheme for street vendors
-26 stressed sectors due to COVID-19, identified by Kamath Committee, get credit support. In September 2020, Kamath Committee appointed by RBI, had identified 26 sectors which were directly impacted by Covid, like power, construction, iron and steel, roads, real estate, wholesale trading, textiles, consumer durables, aviation, logistics, hotels, restaurants and tourism etc. Companies in those sectors, including health, with credit up to Rs 500 crore and categorised as SMA 0 (default less than 30 days) as on 29th Feb 2020, will be eligible for additional guaranteed credit which can be repaid over five years including one-year moratorium - Hari Hara Mishra, Policy Analyst and Columnist
-Energy consumption growth trended higher in October at 12% YoY; GST collections for October grossed Rs 1.05 lakh crore - 10% YoY: FM. Nirmala Sitharaman outlines various economic indicators which show the presence of a strong pitch for recovery in the economy
-FM announces Rojgaar Yojana to boost employment in the country.
-The new Aatmanirbhar Bharat Rozgar Yojana (for job seekers) is being launched to incentivise job creation during the economic recovery. If EPFO registered establishments take in new employees or those who lost jobs earlier, these employees will get some benefits FM said. The scheme will be effective from 1 October 2020 as per the Finance Ministry. If new employees of the requisite number are recruited from October 1, 2020 to June 30, 2021, the establishments will be covered for next two years.
-The central government will give subsidy by way of EPF contributions for two years in respect of the new eligible employees. Subsidy will be credited upfront in Aadhaar-seeded EPFO accounts. - FM
-Incentive in the form of an Income Tax Relief. Relief for home buyers and sellers.
-78 lakh more jobs to generate with new capital outlay under PMAY-Urban. Finance Minister today announced an additional outlay of Rs 18,000 crore for PMAYUrban, which will help ground 12 lakh houses and complete 18 lakh houses. The move will create additional 78 lakh jobs and improve production and sale of steel and cement, resulting in multiplier effect on economy.
-Rs 18,000 crore announced to build 12 lakh more houses and completing 18 lakh houses, creating additional jobs and consuming more steel and cement.
-Rs 10,200 crore additional budget stimulus for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy.
-April-August FDI inflows stood at $35.37 billion, up 13 per cent on-year. Economic growth energised by government’s reform pitch, FM said.
-Help for Construction & Infrastructure-Performance security on contract to be reduced to 3% instead of 5%. Earnest Money Deposit will not be required for tenders and will be replaced by Bid Security Declaration. Relaxations will be given till 31st December 2021.
-Bank credit improved 5.1 per cent as on October 23, GST collections in October rose 10 per cent on-year, FM announced.
-FM announced report card for Atmanirbhar Bharat 1.0 package. 28 states have been brought under OneNationOneRationCard scheme, 68.6 crore beneficiaries can hence lift food grains from any of the 28 states and UTs. Around 14 lakh loans have been sanctioned under PM SVANidhi scheme for street vendors.
-In an effort to lift rural economy, an additional outlay of Rs 10,000 crore is being provided for PM Garib Kalyan Rozgar Yojana. Funds can be used for MGNREGA or for Gram Sadak Yojana, as this will help accelerate rural economy FM said.
-The package follows Wednesday's earlier announcement of production-linked incentives worth about $27 billion over five years for manufacturers in 10 sectors.
Indian government's last stimulus package in May largely failed to soften blow of the strict coronavirus lockdown as it focused on providing liquidity and collateral-free credit for small businesses but with little actual spending.
That package unfortunately excluded badly hit sectors such as tourism, hospitality and aviation.
The government on Wednesday approved a Production-Linked Incentive (PLI) scheme for ten key sectors, including telecom, automobiles and pharmaceuticals, taking the total outlay for such incentives to nearly Rs 2 lakh crore over a five-year period. The scheme is meant to help encourage domestic manufacturing, reduce imports and generate employment as the government works to bolster economic growth. The financial outlay for the new scheme will be Rs 1,45,980 crore.
The Cabinet had also decided to extend the viability gap funding scheme to social infrastructure sectors. The scheme is currently available only for projects concerning economic infrastructure.
The PLI scheme, Sitharaman had said, would provide encouragement to the critical sunrise sectors by ensuring necessary support from the government in addition to creating jobs and linking India to global value chain.
An RBI official said Wednesday that India's GDP is likely to contract by 8.6 per cent for the July-September period, which meant the country would enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the coronavirus pandemic.
Researchers have used the 'nowcasting' method to arrive at the estimates ahead of the official release of data and their views in an article in RBI's monthly bulletin released on Wednesday do not constitute the central bank's views.
The pandemic-induced lockdowns had led to a steep contraction of 23.9 per cent in the GDP for the April-June quarter as compared to the same period a year ago.
The RBI estimated that the economy would contract by 9.5 per cent for the full fiscal year. "India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 2020-21 likely to record the second successive quarter of GDP contraction," as per the article titled 'Economic Activity Index', authored by Pankaj Kumar of the Monetary Policy Department.
The Indian economy, which the International Monetary Fund singled out as a global bright spot only a few years ago, contracted a hefty 23.9% in the April-June quarter and is seen contracting over 10% in the fiscal year to March 2021.
Coronavirus cases are still surging in major Indian cities and the country has been adding over 40,000 cases a day.
Active coronavirus cases have nevertheless fallen below 500,000 for the first time in over three months although the government has eased nearly all restrictions to curb the virus' spread.
It remains to be seen if the government in fact does live up to these expectations.
Inputs: Reuters, News18, ET Now, https://www.pib.gov.in/indexd.aspx