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NEW DELHI : Finance minister Nirmala Sitharaman on Monday announced a relief package targeting healthcare, tourism, exports and job creation to support the economy that is struggling to recover from the pandemic’s second wave.

The liquidity portion of the package, especially for small businesses, could indirectly revive the fortunes of larger industries they source from and help repair broken supply chains. The package also includes risk cover for merchandise and project exports, funds for healthcare, rural digital connectivity and power utilities, and support for businesses to hire new workers.

The package comes after many economists cut their India growth forecast for FY22.

A shot in the arms
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A shot in the arms

The total package, which will be implemented over several years, works out to 6.29 trillion, including two initiatives announced already—additional fertilizer subsidy and free foodgrain supply to the vulnerable sections of society till November.

According to the package, loan guarantees worth 1.1 trillion will be offered to covid-affected sectors, including 50,000 crore to hospitals for expansion and building new facilities in non-metro cities. One sector that would be covered in the remaining 60,000 crore loan guarantee window is tourism. Sitharaman explained that more will be added later on. “As we progress, depending on the needs coming up from the ground, we will keep changing the coverage of the scheme," the minister said.

The scope of an emergency credit line guarantee scheme offering relief to many businesses last year has now been expanded from 3 trillion to 4.5 trillion. Of this, 2.69 trillion has already been granted to over 11 million units, the finance ministry said in a statement. Loans will also be given to 2.5 million small borrowers under a new credit guarantee scheme through microfinanciers. Under this scheme, the National Credit Guarantee Trustee Company (NCGTC) will back banks’ loans to microlenders for on-lending up to 1.25 lakh per borrower.

The government also gave extra time for businesses to sign up for financial assistance towards the provident fund (PF) contribution of workers hired during the pandemic. The Atmanirbhar Bharat Rozgar Yojana, which funded full or partial PF contribution of employees hired under the scheme, depending on the size of the employer, was to expire in June. This has been extended till the end of March next year. Once signed up, government funds the PF of such workers for two years.

Sitharaman explained that from last October until 18 June, about 2.14 million people have benefited from this scheme, in about 79,577 establishments.

The minister also announced financial support to more than 11,000 registered tourist guides and other stakeholders in the sector. Under this, fully guaranteed loans up to 10 lakh will be granted per tourist agency and up to 1 lakh per tourist guide for discharging their liabilities and restarting the business.

The central government will foot 15,000 crore under a 23,220 crore credit guarantee scheme to strengthen public health infrastructure and human resources. This will focus on short-term emergency preparedness with special emphasis on children and paediatric care.

Underwriting additional projects exports worth 33,000 crore through the Exim Bank, 88,000 crore equity infusion in Export Credit Guarantee Corp. (ECGC) over next five years, 19,041 crore viability-gap funding for broadband connectivity in villages in public-private partnership, flexibility in claiming production-linked incentive by large-scale electronics manufacturers and 97,631 crore as Centre’s share in a revamped financial assistance scheme for power distribution companies are the other announcements. Although the revamped scheme for assistance to discoms was announced in the budget, the Centre’s contribution, which is expected to come over the next few years, is revealed only now.

In a series of tweets, Prime Minister Narendra Modi said that Sitharaman’s announcements demonstrate the government’s continuing commitment to reform.

“The measures will help stimulate economic activities, boost production and exports and generate employment," Modi tweeted.

Industry leaders welcomed the move. Confederation of Indian Industry president and chief executive officer and managing director of Tata Steel Ltd T.V. Narendran said in a statement that the targeted interventions, with a special focus on health and tourism, was heartening. He said the liquidity-boosting measures are very welcome step.

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