Union Finance Minister Nirmala Sitharaman on Thursday announced a third stimulus package totalling around Rs 20 lakh crore to help pull the Covid-19-battered economy, which entered recession for the first time.
The FM announced 12 measures under Atmanirbbhar 3.0. The measures included employment boost, incentives for domestic manufacturing, relief for MSME sector, middle class home-buyers and real estate sector.
The stimulus package focus on sectors worst-hit by the coronavirus pandemic. This comes a day after it announced production-linked incentives worth about Rs 2 lakh crore over five years for manufacturers in 10 sectors.
While addressing the media, Sitharaman also outlined various economic indicators which show the "presence of a strong pitch for recovery in the economy".
Here are the key takeaways:
1) Atmanirbhar Bharat Rozgar Yojana
- It will be launched to incentivise job creation during Covid-19 recovery. It will be effective from Oct 1, 2020, to June 30, 2021.
-This is for EPFO registered establishments - if they take in new employees or those who lost jobs earlier - these employees will get some benefits
- Central govt to give subsidy to establishments doing new hiring to cover for retirement fund contributions for new jobs for 2 years
- More than 95% of all establishments and 65% of all employees in the formal sector are estimated to be covered in the first category, wherein EPF contributions will be given by government by way of subsidy support
Beneficiaries:
- New employees joining employment EPFO registered establishments on monthly wages less than Rs 15,000.
- EPF members drawing monthly wage of less than Rs 15000losto lost their jobs during Covid-19 from 1.3.2020 to 20.9.2020 and is employed on or after 1.20.2020
2) 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
- The new scheme will have a 1-year moratorium and 5 years of repayment.
- Entities will get additional credit up to 20% of outstanding credit, repayment can be done in five years' time (1-year moratorium + 4 years repayment)
3) Atmanirbhar Manufacturing Production-Linked Incentives for 10 champion sectors:
4) To boost demand in Real Estate sector, relief for home buyers and sellers:
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.
5) Support for construction and Infrastructure: Relaxation of EMDs and Performance Security on government tenders:
Performance Security on Contracts will now be reduced to 3% instead of 5-10%. This will be extended to all ongoing contracts which are free of disputes. This will also be extended to public sector enterprises.
- Relaxations till December 31, 2021, under General Financial rules.
6) Income tax relief for homebuyers and developers:
FM announced the doubling of the differential between circle rate and agreement value for the primary sale of residential units of up to Rs 2 crore
7) Infrastructure Debt Financing:
Govt. to make Rs 6,000 crore equity investment in debt platform of National Investment and Infrastructure Fund, which will help NIIF raise Rs 1.1 lakh crore by 2025 for financing infrastructure projects
8) Support for Agriculture:
Rs 65,000 crore fertiliser subsidy will be provided to farmers for the upcoming crop season.
9) Boost for rural employment:
Further additional outlay of Rs 10,000 crores will be provided for PM Garib Kalyan Rozgar Yojana in the current financial year.
10) Boost for Project Exports:
Rs 3,000 crore will be released to EXIM Bankfor promotion of project exports through Line of Credit under IDEAS Center
11) Capital and Industrial Stimulus:
Rs 10,200 crore additional budget stimulus will be provided for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy
12) 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. This does not include the cost of vaccine or logistics for vaccine distribution, which will be undertaken by the Ministry of health and Family Welfare