Context- Finance Minister Nirmala Sitharaman announced the next set of stimulus package to boost the coronavirus-hit economy.
What are the key highlights of 3rd stimulus package?
Union Finance Minister on recently announced a third stimulus package to help pull the Covid-19-battered economy. The FM announced 12 measures under Atmanirbhar Bharat3.0 which includes-
- Atmanirbhar Bharat Rozgar Yojana.
- Emergency Credit Line Guarantee Scheme (ECLGS) 2.0.
- Atmanirbhar Manufacturing Production-Linked Incentives for 10 champion sectors.
- To boost demand in Real Estate sector, relief for home buyers and sellers.
- Support for construction and Infrastructure- Relaxation of EMDs and Performance Security on government tenders.
- Income tax relief for homebuyers and developers.
- Infrastructure Debt Financing.
- Support for Agriculture.
- Boost for rural employment.
- Boost for Project Exports.
- Capital and Industrial Stimulus.
- Research and Development grant for Covid-19 vaccine.
Previously announced package-
- Pradhan Mantri Garib Kalyan Yojana (PMGKP) – The government had announced Rs 1.70 lakh crore during March to protect the poor and vulnerable sections from the impact of COVID-19 crisis.
- The Aatmanirbhar Bharat Abhiyan package– The stimulus of Rs 20.97 lakh crore in May, largely focused on supply-side measures and long-term reforms.
What are the key areas of focus of this fiscal package?
- Incentivizing job creation-
- Boost formal sector employment-Providing incentives to EPFO-registered firms to hire more employees could lead to job creation. Formalization of the existing informal work force in urban areas.
- MGNREGA boost– Further additional outlay of Rs 10,000 crores will be provided for PM Garib Kalyan Rozgar Yojana in the current financial year.
- To boost demand in Real estate sector –
- Rs 18,000 crores additional outlay for PM Awas Yojana (Urban) over the Budget Estimates for 2020-21. This is over and above Rs 8,000 core already this year.
- This will help 12 lakh houses to be grounded and 18 lakhs to be complemented.
- The scheme will also guarantee additional jobs to 78 lakhs.
- To boost manufacturing production-
- Production Linked Incentives with proposed expenditure of ₹1.46 lakh crore over five years will be offered to ten stressed sectors to boost domestic manufacturing.
- And create an efficient domestic manufacturing ecosystem.
- To Research and Development grant for Covid-19 vaccine-
- Rs 900 crores provided for Covid-19 Suraksha Mission for the development of the Indian vaccine to the Department of Biotechnology.
- Emergency Credit Line Guarantee Scheme (ECLGS) 2.0-
- EECLG 2.0 for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021.
- Under this credit scheme, banks will be able to lend to stressed sectors from 26 sectors identified by the K.V. Kamath committee earlier this year.
- The new scheme will have a 1-year moratorium and 5 years of repayment.
What are the challenges to India’s economic recovery according to RBI?
- The foremost risk stems from the global economy now at risk from the second wave of COVID-19.
- The Second major risk is the stress that has been intensifying among households and corporations
- Ensuring credit off-take of previously announced schemes amongst the poorest sections must be a priority.
- Forcing banks to lend to companies where assessing risk has become a challenge due to the pandemic puts banks at a bigger risk.