The Ministry of Finance has recently announced a number of measures, amounting to Rs. 6,28,993 crore, aimed at providing relief to various sectors affected by the second wave of the Covid-19 pandemic. This package is specifically designed to prepare the health systems for emergency response and boost growth and employment. However, it is estimated that this will increase the Fiscal Deficit by 0.6%.
Key Points of the Economic Relief Package
The economic relief from the Covid-19 pandemic comes in the form of a Loan Guarantee Scheme which will benefit businesses with additional credit of Rs 1.1 lakh crore. This includes Rs 50,000 crore for the health sector and Rs 60,000 crore for other sectors, including tourism. The health sector funding is particularly focused on scaling medical infrastructure in underserved non-metropolitan areas.
Guarantee Coverage Details and Emergency Credit Line Guarantee Scheme
The guarantee coverage provides 50% for expansion and 75% for new projects. In aspirational districts, the guarantee cover of 75% will be available for both new projects and expansion. The maximum loan admissible under the scheme is Rs. 100 crore and the guarantee duration is up to 3 years.
Moreover, there is a plan to expand the Emergency Credit Line Guarantee Scheme by Rs 1.5 lakh crore. This scheme was initially launched as part of the Atmanirbhar Bharat Package in May 2020.
New Schemes Benefitting Microfinance Institutions and Small Borrowers
A new Credit Guarantee Scheme for Micro Finance Institutions is part of the relief package. This scheme aims to assist the smallest borrowers served by the Micro Finance Institutions network. Scheduled Commercial Banks will receive a guarantee for loans provided to existing or new Non-Banking Financial Company-Micro Finance Institutions for lending up to Rs 1.25 lakh to approximately 25 lakh small borrowers.
Extension of Aatmanirbhar Bharat Rozgar Yojana and Pradhan Mantri Garib Kalyan Ann Yojana
The relief package extends the Aatmanirbhar Bharat Rozgar Yojana that incentivises employers for job creation and restoration of employment loss through the Employees’ Provident Fund Organisation. Additionally, the Pradhan Mantri Garib Kalyan Ann Yojana will provide 5 kg of free food grains per month to beneficiaries under the National Food Security Act from May-November 2021.
Focus on Strengthening Public Health
A new scheme with an outlay of Rs. 23,220 crore targeting short term emergency preparedness with special emphasis on children and paediatric care has been announced as part of the relief package.
Growth & Employment Measures in Package
To boost growth and employment, the package includes several measures like free one-month tourist visa to 5 lakh tourists, additional subsidy for DAP & P&K fertilizers, and a revival package for North Eastern Regional Agricultural Marketing Corporation.
Efforts for Boosting Project Exports
An additional corpus will be provided to the National Export Insurance Account over five years, enabling it to underwrite additional Rs. 33,000 crore of project exports. Alongside, equity infusion in Export Credit Guarantee Corporation over five years will boost export insurance cover by Rs. 88,000 crore.
Digital India Initiative
Additional Rs. 19,041 crore will be allocated to implement Bharat Net in PPP model in 16 States, enabling expansion and upgradation of Bharat Net to cover all Gram Panchayats and inhabited villages.
Extension of PLI Scheme
The tenure of Production-Linked Incentive scheme for Large Scale Electronics Manufacturing has been extended by one year till 2025-26.
Reform-Based Result-Linked Power Distribution Scheme
The financial assistance to DISCOMS for infrastructure creation, system upgradation, capacity building and process improvement is part of a revamped Reforms-Based, Result-Linked power distribution scheme announced in the Union Budget of 2021-22.
New Streamlined Process for PPP Projects and Asset Monetization
A new policy will be formulated for appraisal and approval of Public-Private Partnerships proposals and monetization of core infrastructure assets.
Significance of the Package
The relief package aims to provide much-needed liquidity, revive employment-intensive sectors such as tourism, mitigate further closures, create new job opportunities, and enable the Covid-affected sectors to rise from past challenges.
