The Indian government recently introduced a package of measures worth Rs. 1.2 lakh crore to boost job creation and support stressed sectors due to the COVID-19 pandemic. These steps include provisions for liquidity support in infrastructure and housing, as well as an additional outlay of Rs. 65,000 crore as a fertiliser subsidy to address increasing demands following a robust monsoon season and increased crop-sown area. This package falls under the banner of the government’s Aatmanirbhar Bharat 3.0 initiative.
Atmanirbhar Bharat Rozgar Yojana
One of the key features of this plan is the Atmanirbhar Bharat Rozgar Yojana. This scheme aims at creating new employment opportunities amid the economic recovery phase of the COVID-19 pandemic. The government will subsidize provident fund contributions for adding new employees to establishments registered with the Employees’ Provident Fund Organisation (EPFO). Benefits will be given to organizations based on their employee count, and subsidies will be credited upfront in Aadhaar-seeded EPFO accounts of new employees.
ECLGS 2.0
The Emergency Credit Line Guarantee Scheme (ECLGS) 2.0 targets the healthcare sector and 26 stressed sectors identified by the Kamath Committee that have credit outstanding above Rs. 50 crore and up to Rs. 500 crore. The entities in these sectors will receive additional credit up to 20% of outstanding credit, repayable over five years.
Additional Outlay for PM Awas Yojana – Urban
The PM Awas Yojana – Urban, launched in 2015 to provide housing in urban areas by 2022, is getting an additional Rs. 18,000 crore. This increase is expected to create additional jobs and improve the production and sale of construction materials like steel and cement, stimulating the economy.
Relaxation of Earnest Deposit Money & Performance Security on Government Tenders
The government also announced relaxing the earnest money deposit and performance security requirements on their tenders. The performance security deposit on contracts is reduced to 3%, and earnest deposit money will no longer be required, giving a significant relief to the construction sector.
Income Tax relief for Developers & Home Buyers
To further stimulate the real estate sector, the government has permitted developers to sell housing units at 20% lower than the circle rate. This initiative is available only on primary sale of residential units with price value up to Rs. 2 crore until 30th June 2021.
Infra Debt Financing
In another move to trigger economic activity, the government announced an equity investment of Rs. 6,000 Crore in the debt platform of National Investment and Infrastructure Fund (NIIF). This will enable NIIF to provide a debt of Rs. 1.1 Lakh Crore for infrastructure projects by 2025.
Boost for Rural Employment: PM Garib Kalyan Rozgar Yojana and more
Rural employment gets a boost with an additional outlay of Rs. 10,000 Crore under PM Garib Kalyan Rozgar Yojana. Furthermore, developers have been allowed to sell their housing units at 20% lower than the circle rates boosting project exports by Rs. 3,000 Crore. And an additional budget stimulus of Rs. 10,200 Crore has been announced for domestic defence equipment, industrial infrastructure, and green energy.
R&D grant for Covid Vaccine
The government made a provision of Rs. 900 Crore for the Department of Biotechnology to be utilized in Research and Development of Indian Covid Vaccine.
The government’s strategy revolves around creating an ecosystem that kickstarts domestic demand, motivates companies to create jobs and boost production while extending benefits to those in distress. However, some risks remain such as inflation, poor global growth due to a resurgence in COVID cases, and stress amongst households and firms. This necessitates prompt action from the government.
