Exclusive | Centre prepares stimulus 4.0 for Diwali release; urban jobs scheme likely to be dropped

The Narendra Modi government is actively working on yet another round of stimulus measures, which could be announced near Diwali, Moneycontrol has learnt from multiple sources. This time, measures could include an infrastructure push with focus on urban projects, sectoral intervention for sectors like hospitality and tourism, and extension of the production-linked incentive (PLI) scheme to more sectors.

However, the much discussed proposal of an urban jobs programme has now been put on the back-burner. Policymakers at the Centre are of the view that investment by it and its state-owned companies into urban projects will lead to employment generation without resorting to a separate scheme.

“The focus will be on projects, especially in Tier 1 to Tier 4 cities, where money can be pumped in to enable quick gestation periods and completion times. This will generate substantial employment,” said a senior official, speaking on condition of anonymity.

The plan is to identify 20-25 projects from the National Infrastructure Pipeline, into which capital expenditure can be pumped in expeditiously. These projects are likely to include the proposed airports in Navi Mumbai and Greater Noida, the official said.

“We are working on the next (stimulus) package, it may be announced before Diwali,” said a second official.

This will be the fourth set of stimulus measures being announced by the Centre, after Gareeb Kalyan Yojana in late March, Aatmanirbhar Bharat initiatives in mid-May, and the measures on increased capital expenditure and festival bonus and LTC schemes for central government employees.

While the specifics are still being worked out, officials in the Finance Ministry believe that the Centre can find the resources for the upcoming announcements without resorting to additional borrowing. For now, the government is sticking to its expanded borrowing target of Rs 12 lakh crore for 2020-21.

Officials cited above also believe that instead of an urban jobs programme on the lines of MGNREGA, the money can be better utilised as capital expenditure. As per earlier estimates, an urban NREGA could have cost the exchequer around Rs 35,000 crore.

In an interview with Moneycontrol earlier this month, Principal Economic Advisor Sanjeev Sanyal had said the Centre was considering sector-specific interventions for the industries badly hit by the Covid-19 pandemic, including hospitality and tourism.

“There may be certain sectors that require special love and care. And in this context, the tourism and hospitality industry is a particularly difficult one. These particular sectors have not only been hit by the lockdown, but very directly hit by the pandemic itself,” he had said.

Apart from these measures, the Centre plans to extend PLI scheme, currently in place for electronics, and medicines and pharmaceuticals, to more sectors that may include specialised pharmaceutical product makers, textile units, food processing plants, solar panel makers, and automobile components manufacturing.

Senior officials from the Finance Ministry, including Finance Minister Nirmala Sitharaman, Economic Affairs Secretary, and Sanyal have said over the past weeks that the government will come out with another set of stimulus announcements soon.