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Union Finance Minister Nirmala Sitharaman addressing a press conference to announce a  ₹1.7 lakh crore Gareeb Kalyan Yojana to help the poor in the view of the coronavirus lockdown (Phoo: PTI)
Union Finance Minister Nirmala Sitharaman addressing a press conference to announce a 1.7 lakh crore Gareeb Kalyan Yojana to help the poor in the view of the coronavirus lockdown (Phoo: PTI)

Sitharaman announces 1.7 trillion package for the poor hit by the lockdown

  • Doctors, Asha workers, paramedics, sanitation workers, nurses will be provided medical insurance cover of 50 lakh per person
  • The relief package, under a newly framed Prime Minister Garib Kalyan Yojana, aims to alleviate the financial pain faced by migrant workers, farmers, urban and rural poor and women

NEW DELHI : India rolled out a 1.7 trillion relief package, amounting to about 1% of its gross domestic product, marking an aggressive attempt to limit the economic damage caused by the coronavirus outbreak and tackle the loss of livelihood of millions of poor hit by an unprecedented 21-day nationwide lockdown.

The relief package, under a newly framed Prime Minister Garib Kalyan Yojana, aims to alleviate the financial pain faced by migrant workers, farmers, urban and rural poor and women.

As part of the lockdown to stem the spread of the deadly virus, the government has stopped public transport, airlines and construction work, bringing to a halt most economic activities and leaving millions of workers in the informal economy without a livelihood.

“We don’t want anyone to remain hungry. We will take care of the protein requirements of the poor and give money in their hands through direct benefit transfer," finance minister Nirmala Sitharaman said at a press briefing on Thursday.

Asked if more such measures are expected, Sitharaman said the latest announcements are for those who require help immediately. “As things develop, we will come back," she added. However, Sitharaman did not say whether the 1.7 trillion is fresh money being pumped into the economy or has been earmarked through recalibration of existing schemes.

About 800 million people will get 5 kg of wheat or rice each month for the next three months for free over and above the 5kg they already get.
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About 800 million people will get 5 kg of wheat or rice each month for the next three months for free over and above the 5kg they already get.

The latest measures come two days after Sitharaman announced a set of relaxations for businesses, easing tax compliance and bankruptcy rules in a bid to help companies and workers cope with the fallout of the coronavirus pandemic.

Sitharaman said about 2.2 million health professionals at the frontlines of fighting the Covid-19 outbreak, including doctors, nurses, ASHA workers, paramedics, sanitation workers will be provided medical insurance cover of 50 lakh per person. About 800 million people will get 5 kg of wheat or rice each month for the next three months for free over and above the 5kg they already get. Besides, 1kg of pulses for each household will also be given for three months.

Making a series of announcements on cash transfers for various sections of the society, Sitharaman said under the PM Kisan scheme, the first installment of 2,000 will be transferred to the accounts of 86.9 million farmers in April. The scheme provides 6,000 per year to eligible farmers. Under MGNREGA, regular wages will be hiked from 182 per day to 202 per day, benefitting 50 million families. The hike in wage is expected to give additional income of 2,000 per worker. To the eligible senior citizens, widows and handicapped, a one-time amount 1,000 will be transferred in two installments over the next three months, benefitting 30 million people.

Aditi Nayar, principal economist at Icra Ltd, said the announcements related to cash transfers appear to be relatively modest at this stage. “Accordingly, we now expect the impact of social distancing and the lockdowns to limit GDP growth to 2.4% in Q4 FY2020 and a marginal 0.5% in Q1 FY2021, despite the support from government spending. As a result, we expect the annual GDP growth to ease from 4.4% in FY2020 to 4.2% in FY2021," she added.

Women who often have fewer economic choices to make are a major beneficiary from the announcements. A one-time transfer of 500 per month for next three months to the Jan Dhan accounts of 200 million women will be made. Women of 83 million BPL families will be provided free cooking gas cylinders for three months under the Ujjwala scheme. Collateral-free loans provided to women self-help groups have also been doubled to 20 lakh for 6.3 million such groups, which will benefit 70 million households.

Addressing the concern of workers in the organized sector who are at risk of losing their jobs due to the shutdown, Sitharaman said government will bear the cost of the provident fund contributions, both of the employer and employees—12% each—for the next three months for those establishments which have up to 100 employees and 90% of whom are earning less than 15,000 per month as salary. Provident fund scheme regulation will be amended to allow non-refundable advance of 75% from the provident fund for contingency expenditure or three months of wages whichever is lower, benefitting 48 million workers.

Ranen Banerjee, leader at PwC India, said the announcements will take the pressure off employers and stem the lay-off pressure in small units and provide cash in hands of workers to sustain through a lean quarter till operations resume.

The central government will direct state governments to use the existing welfare fund with 31,000 crore reserves to provide assistance to 35 million construction workers to protect them from economic disruption.

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Highlights of the economic relief package for those affected by the lockdown:

  • Front loading of income support to benefit 86.9 mn farmers
  • Raising wages under MGNREGA to benefit 50 mn families
  • One-time payment of 1,000 to aged people, widows, disabled
  • 200 mn women with no-frills bank A/Cs to get 500 for next 3 months
  • 80 mn households to get free refill of gas cylinders for 3 months
  • Govt to pay 24% EPFO contribution of workers, firms for 3 months
  • 50 lakh medical insurance cover for healthcare workers
  • 35 mn construction workers to benefit from a 31,000 cr fund
  • District mineral funds to be used for testing and screening

Gireesh Chandra Prasad contributed to this story.

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