Stimulus package after 2nd wave

IN NEWS:

• Finance Minister Nirmala Sitharaman on Monday announced some fresh relief measures for the economy, the first such package after the second COVID-19 wave.

STIMULUS PACKAGE:

• The stimulus package is pegged at Rs 6,28,993 crore.
• The core focus of the package is extension of loan guarantees, concessional credits and indirect support for sectors hit by COVID-19, and investments in enhancing the country’s healthcare infrastructure.

KEY FEATURES:

1. Rs 1.1 lakh crore loan guarantee scheme:

• A Rs 1.1 lakh crore loan guarantee scheme for Covid-affected sectors was announced. Out of the Rs 1.1 lakh crore, Rs 50,000 crore has been earmarked for the health sector.

2. Expansion of healthcare infrastructure:

• Rs 23,220 crore has been earmarked for expansion of medical infrastructure for one year.
• This funding aims to increase the number of ICU beds and enhance the availability of equipment and liquid medical oxygen (LMO). Special emphasis will be laid on the preparedness of the healthcare infrastructure in terms of child and paediatric care.

3. Free visas, loan for travel agencies:

• Once issuance resumes, the first five lakh tourist visas will be issued free of charge. This incentive will cost the government around Rs 100 crore.
• A loan guarantee scheme for the tourism sector has also been announced. The loan will be provided with 100 per cent guarantee of up to Rs 10 lakh for travel agencies and Rs 1 lakh for regional tourist guides.

4. ECLGS cap raised by Rs 1.5 lakh crore:

• The cap of the Emergency Credit Line Guarantee Scheme (ECLGS) has been raised to Rs 4.5 lakh crore from the earlier Rs 3 lakh crore.
• ECLG Scheme: http://ilearncana.com/details/Emergency-Credit-Line-Guarantee-Scheme-ECLGS/1032

5. Support for export sector:

• A corpus announced by the Ministry of Finance will enable the National Export Insurance Account (NEIA) to underwrite an additional Rs 33,000 crore of project exports over five years. The NEIA, through EXIM Bank, facilitates cover for buyer's credit to project exporters and borrowers with less creditworthiness.
• Finance Ministry also proposed Rs 88,000 crore to boost export insurance cover.

6. Extension of Aatmanirbhar Bharat Rozgar Yojana:

• The Ministry extended the Aatmanirbhar Bharat Rozgar Yojana till March 31, 2022. Pradhan Mantri Gareeb Kalyan Anna Yojana (PMGKAY) has also been extended till November, 2021.
• A wage subsidy scheme aims to incentivize employers via EPFO to create fresh employment.

7. PPP projects, DISCOMs, BharatNet:

• A new process is being adopted to ensure speedy clearance of Public-Private Partnership projects.
• The government has allocated Rs 3.03 lakh crore to revamp DISCOMs and an additional Rs 19,041 crore has been earmarked for BharatNet.
• The Ministry has also extended the tenure of Production Linked Incentive Schemes (PLIs) for large scale electronic manufacturing.

8. Support for agriculture sector:

• The Nutrient Based Subsidy (NBS) for fertilizers has been increased to Rs 42,275 crore. The government will also release 21 new varieties of climate-resilient crop varieties developed by the Indian Council of Agricultural Research (ICAR).
• Stimulus of Rs 77.45 crore has been earmarked for this purpose to enhance agriculture-related activities in the North East.

SIGNIFICANCE:

• Preparing for a third wave:
  • The investments in health sector, especially in pediatrics care is an indication that the government is preparing for a possible third wave of the pandemic.
• Revival of economy:  
  • The liquidity support, especially for small businesses and export sector, could revive the fortunes of industries and revive the broken supply chains.
  • The package seeks to revive the tourism sector, which was among the worst affected industries due to the pandemic. 
• Thrust on employment generation:
  • The wage subsidy scheme would reduce the cost borne by companies. This can lead to an increase in the salary packages of new employees and promote employment generation.
• Continued support for Atmanirbhar Bharat:
  • Extension of Production Linked Incentive Scheme in electronics sector is in line with India’s policy of reducing import dependency and promoting domestic capabilities.
• Emphasis on reforms:
  • Th stimulus for DISCOMs seeks to push them to opt for 'reform-based, result-linked' power distribution through upgradation of existing systems and enhanced capacity.
• Extension of support:
  • By extending schemes like Garib Kalyan Anna yojana and ECLGS, the package seeks to continue the government’s efforts of improving the social security net of common man.