Atmanirbhar Bharat 3.0: FM Sitharaman announces measures to boost COVID-19 hit economy
The total stimulus by the government and the Reserve Bank of India (RBI) so far works out to Rs 29.87 lakh crore, or 15% of India's GDP
In a boost to the COVID-19 hit economy, Finance Minister Nirmala Sitharaman has announced a new set of stimulus measures including a scheme to provide jobs and a measure to boost the demand of residential real estate.
Addressing a press conference on Thursday, the FM announced 12 new measures that can be called the next step in the series of stimulus announcements amounting to Rs 2,65,080 crore under Atmanirbhar Bharat 3.0.
The total stimulus by the government and the Reserve Bank of India (RBI) so far works out to Rs 29.87 lakh crore, or 15% of India's GDP.
This includes, in addition to the measures announced by the RBI till October 31, the Atmanirbhar Bharat Abhiyan 1.0, 2.0, and 3.0, the PM Garib Kalyan Package, and the PMGKP Anna Yojana.
Atmanirbhar Bharat Rozgar Yojana
The Finance Minister announced the launch of a new scheme “Atmanirbhar Bharat Rozgar Yojana.” It will incentivize the creation of new employment opportunities during the COVID recovery phase.
The new scheme will benefit any new employee joining employment in EPFO registered establishments on monthly wages less than Rs 15,000. It will also benefit those who left their job between March 1 and September 30 and are employed on or after October 1, said Sitharaman.
To avail of benefits under this scheme, the organizations with fewer than 50 employees will have to hire at least two employees, and those with more than 50 employees will have to hire five or more.
The central government will provide subsidy for two years in respect of newly eligible employees engaged on or after October 1. The organizations of up to 1000 employees would receive employee’s contributions and employer’s contributions, totaling 24 percent of wages, for two years. Employers with over 1,000 employees will get employees’ EPF contribution of 12 percent from the central government. The subsidy support will be credited upfront in the Aadhar seeded EPFO account (UAN) of an eligible new employee.
Demand booster for Residential Real Estate
Sitharaman said that the ministry has decided to increase the differential between circle rate and agreement value from 10 percent to 20 percent for the period from the date of the announcements to June 20, 2021. This will be valid for only primary sale of residential units of value up to Rs 2 crore.
The income tax relief provides an incentive to the middle class to buy homes, the Finance Minister said. It will also help in clearing the unsold inventory.
Emergency credit line guarantee scheme 2.0
The Finance Minister further announced the extension of the Emergency credit line guarantee scheme for MSMEs, businesses, MUDRA borrowers, and individuals till March 31, 2021. She further announced the launch of ECLGS 2.0 for guaranteed credit to 26 stressed sectors.
The tenor of additional credit under ECLGS 2.0 will be five years, including one year of the moratorium on principal repayment, the finance minister said.
FM announces Rs 18 cr. outlay under PM Awaas Yojana
The Finance Minister announced an additional outlay of Rs 18 crore for the Prime Minister Awaas Yojana-Urban, which will be provided through additional allocation and extra-budgetary resources.
It will create additional 78 lakh jobs and improve the production and sale of steel and cement, resulting in a multiplier effect on the economy, the Finance Minister noted.
Support for Construction and Infrastructure - Relaxation of Earnest Money Deposit (EMD) and Performance Security on Government Tenders
To provide ease of doing business and coming as a relief to contractors whose money otherwise remains locked up, the Finance Minister announced the reduction of performance security on contracts to 3 percent. She further noted that EMD will not be required for tenders and will be replaced by Bid Security Declaration. Relaxation will be given till December of the next year.
Enhanced outlays under PM Garib Kalyan Rozgar Yojana
The Finance Minister announced an outlay of Rs 10,000 crore to be provided for Prime Minister Garib Kalyan Rozgar Yojana in the current financial year. It will accelerate the growth of the rural economy, the finance minister noted.
R&D grant for COVID Vaccine Development
For Covid-19 vaccine development, Rs 900 crore provided for Covid Suraksha Mission for research and development of Indian Covid Vaccine to the department of Biotechnology, the Finance Minister noted.
Other measures announced by the Finance Minister
Speaking at the conference, the Finance Minister said, ”Government will make ₹ 6,000 crore equity investment in debt platform of the National Investment and Infrastructure Fund, which will help NIIF raise ₹ 1.1 lakh crore by 2025 for financing infrastructure projects.”
She further noted that 65,000 crore fertilizer subsidy will be provided to farmers to support the agriculture sector.
“Fertilizer consumption is going up significantly, an increased supply of fertilizers will ensure that forthcoming crop seasons will not be affected for want of adequate fertilizers,” the FM said.
Sitharaman announced that Rs 3,000 crore will be released to EXIM bank for the promotion of project exports through lines of credit under the Indian Development and Economic Assistance Scheme (IDEAS) Scheme.
She further noted that Rs 10,200 crore additional budget outlay will be provided towards capital and industrial expenditure.
Further, the Finance minister pointed out that the cabinet’s decision to approve the Production Linked Incentives scheme for 10 sectors will give a big boost to the economy, investment, and job creation.