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Finance Minister Nirmala Sitharaman announces relief measures amid second COVID-19 wave in India

Finance Minister Nirmala Sitharaman announced a slew of new economic and growth measures amid second wave of COVID-19 in India.

June 28, 2021 / 04:44 PM IST
Union Finance Minister Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman, on June 28, said she would announce eight relief measures amid the second coronavirus wave in India. Of these eight measures, four are “absolutely new”, she said.

Elaborating on what can be expected, the finance minister said that one item on the list was related to health infrastructure – where the focus was on health and medical infrastructure in Tier II and Tier II cities in India.

She said this measure guaranteed 75 percent coverage for new projects and 50 percent coverage for expansion projects for three years. She added that aspirational districts would get 75 percent coverage.

Sitharaman added that there was also another set of 8 items pertaining to growth, exports and employees – of which six are new.

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The relief measures come amid economic distress caused by the second wave of COVID-19 in the country.

After the pandemic began in March 2020, the Ministry of Finance and the Reserve Bank of India (RBI) had announced several measures to aid individuals and business during the first wave of COVID-19 cases. Many of the schemes were announced under the Pradhan Mantri Garib Kalyan Yojana and the Aatmanirbhar Bharat economic stimulus package.
Snapshot of the financial details of the schemes announced
Economic Relief from COVID-19 PandemicRs 376,244 crore
New Scheme for Public HealthRs 15,000 crore
Impetus for Growth and EmploymentRs 237,749 crore
TOTALRs 628,993 crore

Here are the relief measures announced so far:

- A total of Rs 1.1 lakh crore Loan Guarantee Scheme for sectors affected by COVID-19, wherein Rs 50,000 crore is allocated to the health sector for scaling up health infrastructure and Rs 60,000 crore is allocated to other sectors.

Further, maximum loan amount for the health sector is Rs 100 crore, with the interest rate cap being 7.95 percent. The interest rate cap for other sectors is at 8.25 percent. The finance minister said that coverage “will be changed based on evolving needs”.

- Credit line Emergency Credit Line Guarantee Scheme (ECLGS) given as part of Aatmanirbhar Bharat Package has been extended by another Rs 1.5 lakh crore. “Scope of scheme itself has been enlarged,” Sitharaman said, adding that the overall cap has been increased from Rs 3 lakh crore to Rs 4.5 lakh crore.

- New Credit Guarantee Scheme launched to provide loans to small borrowers, via Micro Finance Institutions (MFIs), where the maximum loan to individuals will be Rs 1.25 lakh at an interest rate below 2 percent – as prescribed by the RBI.

Further, with focus on new loans, stressed borrowers except non-performing assets will now be covered. The loan duration will be for three years. “This scheme has been announced, in order to reach out to smallest of the small borrowers in the hinterland, including in small towns,” Sitharaman said.

- New Scheme to revive Tourism where financial support will be extended to more than 11,000 registered tourist guides and Travel & Tourism Stakeholders (TTS). Under this, TTS will get up to Rs  10 lakh loan, while Licensed Tourist guides will get up to Rs. 1 lakh loan.

This scheme is intended to help the tourism stakeholders survive the second wave of COVID-19.

- Once tourist visa issuance is resumed, first 5 lakh tourist visas to be issued totally free of charge. This will apply till March 31, 2022 or till the first 5 lakh tourist visas get covered, whichever is earlier. One tourist can avail the benefit only once.

- Aatmanirbhar Bharat Rozgar Yojana extended. The scheme was launched to incentivise job creation and restoration has now been extended from June 30, 2021 to March 31, 2022. More than 21.4 lakh people of nearly 80,000 establishments have already benefited from the scheme

- Farmers to get additional protein-based fertilizer subsidy of nearly Rs 15,000 crore.

- Free food grains will be provided to the poor from May to November 2021 (as provided last year), under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKY). Total financial implication of the scheme is nearly Rs 94,000 crore, making the total cost of PMGKY nearly Rs 2.28 lakh crore.

- Rs 23,220 crore allocated for public health, with sharp focus on child and paediatric care. The amount is to be spent in this financial year itself. The scheme will include human resource augmentation to rope in medical students, nurses; strengthening of infra like ICU beds, ambulances, O2 supply, equipment, and medicines.

- 21 Climate-resilient and bio-fortified special varieties of crops to be released by the Indian Council of Agricultural Research. These crops with high nutritional content, without having to add supplements will greatly help farmers increase income. It signals a shift from yield to nutrition and climate-resilience.

- The North Eastern Agricultural Marketing Corporation to get Rs 77.45 crore revival package for financial restructuring and fund infusion. This is aimed to help plan and give higher price to farmers, bypassing middlemen.

- National Export Insurance Account to get additional financial support over 5 years. This will allow the NEIA to under-write additional project exports worth Rs 33,000 crore and will immediately ramp up India's capacity to extend cover to project exports.

- Equity to be infused into Export Credit Guarantee Corporation, to provide credit insurance services for merchandise exports. This will enable ECGC to extend insurance cover up to Rs 88,000 Crore for merchandise exports.

- More than Rs 19,000 crore additional outlay for Bharat Net Project which will enable extension of Bharat Net broadband connectivity to all remaining villages. Notably, more than 1.56 lakh out of 2.5 lakh gram panchayat are already connected or service-ready.

- Production Linked Incentive Scheme to incentivise large-scale electronics manufacturing has been extended by one year, till 2025-'26. Thus, investments made in 2020-21 will continue to be covered. Companies can opt to choose any five years for meeting production targets.

- Reform Based Result Linked Power Distribution Scheme to get total allocation of Rs. 3.03 lakh crore for power infrastructure creation and upgradation. It consists state-specific intervention and will include 25 crore smart meters, 10,000 feeders, 4 lakh km of low tension overhead lines.

- New Process for PPP Project will consist of ‘Appraisal, Approval, Monetization’ for speedy clearances, to bring in private sector efficiency and streamline the process, in place of long and multi-level approval process. This will be for core infrastructure projects, including through Infrastructure Investment Trusts.

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