Battling COVID: Centre unleashes 8 new schemes to boost economy

Major announcements include a ₹ 1.1 lakh crore loan guarantee scheme for the Covid-affected

Nirmala Sitharaman, media briefing, press conference, economic revival, lockdown, Narendra Modi, stimulus package
‘Does he [Rahul Gandhi] understand what monetisation is?’ Finance Minister Nirmala Sitharaman asked on Wednesday | File Photo

Finance Minister Nirmala Sitharaman, on June 28, announced eight new schemes to improve the country’s economy. The measures include boosting healthcare infrastructure, providing credit guarantee scheme and creating more job opportunities, among other things.

Major announcements include a ₹ 1.1 lakh crore loan guarantee scheme for the Covid-affected and an additional ₹ 1.5 lakh crore under the Emergency Credit Line Guarantee Scheme that was launched as part of the Atmanirbhar Bharat package last year.
The measures’ objectives are to counter the effects of the second wave of the coronavirus pandemic.

Also read: India on recovery path but second COVID wave tripping economies: FM

“While the measures are welcome and target Covid sensitive sectors, most of the fiscal support is still below the line and in the form of loan guarantees, and not direct stimulus. Overall, amid various push and pull, there is a likelihood of fiscal slippage to the tune of around 0.5% from the initially budgeted 6.8%. Despite the slippage, the effective fiscal impulse will still be negative in FY22. Given the limited efficacy of monetary easing currently, continued countercyclical fiscal policy support—and avoiding a premature consolidation—remains crucial,” said Madhavi Arora, lead economist, Emkay Global Financial Services.

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Also read: Second wave, curbs will weaken India’s growth recovery: Moody’s

  • Out of the loan guarantee scheme of ₹1 lakh crore, the health sector will receive ₹50,000 crore to improve their medical infrastructure, especially in the under-served areas. The interest rate is at 7.95 percent. Other sectors will get ₹60,000 crore at a maximum annual interest rate of 8.25 percent.
  • ₹23,220 crore for public health. This amount shall be used for short-term emergencies and improve paediatric care facilities.
  • ₹5 lakh score guarantee scheme emergency credit line guarantee scheme. ₹1.1 lakh crore guarantee scheme for COVID-19 affected sectors as well. The overall cap of Emergency credit line guarantee scheme has also been raised from ₹3 lakh crore to ₹4.5 lakh crore.
  • The finance minister also promised support to the battered tourism sector in the form of a ₹10 lakh loan to travel agencies and ₹1 lakh loan to tourist guides. When the process begins, first five lakh tourists shall receive free tourist visas.
  • To boost employment, the finance minister announced the Atmanirbhar Bharat Rozgar Yojana to be extended from June 30 to March 31, 2022. The scheme incentivizes employers to create new employment through Employee Provident Fund Organisation.
  • Production-Linked Incentive (PLI) scheme for large scale electronics manufacturing will be extended by a year. The scheme will now continue till 2025-26.
  • Since monsoon has arrived in the western and southern parts of the country, the finance minister announced an additional amount of ₹14,775 crore for DAP and NPK-based complex fertilizers.
  • Pradhan Mantri Gareeb Kalyan Yojana was extended from June 30, 2021 to March 31, 2022. With this, the total cost of the Pradhan Mantri Gareeb Kalyan Yojana now stands at ₹2,27,841 crore. The scheme entails providing free food grains to the vulnerable sections amid the pandemic.
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