On 28 June Monday, Nirmala Sitharaman announced a slew of new economic measures to revive an economy tattered by COVID-19. She presented a 7-point relief measure that included financial assistance for different sectors.
7 relief measures announced by the GOI
1. Loan guarantee scheme of Rs. 1.1 lakh crores for coronavirus-affected sectors
Under this announcement of Rs. 1.1 lakh crores, Rs. 50,000 crores will be reserved for the healthcare sector, and the remaining Rs. 60,000 crores for other sectors.
It’s intended to scale up healthcare infrastructure in underprivileged areas. The Finance Minister further mentioned that this scheme would be for developing healthcare infrastructure in regions other than the 8 metropolitan cities.
This plan will include both public and private hospitals. Moreover, they can avail a loan of up to Rs. 200 crores with a guarantee period of 3 years. Herein, the fund allocation will be divided into 60% for expansion and 75% for upcoming projects.
Couple of more points to note
- The maximum interest rate for any credit with a guarantee to develop medical infrastructure is 7.95%. Without any guarantee, this rate is at 10-11%.
- Other sectors can obtain loans at the highest interest rate of 8.25% per annum from their allotment of Rs. 60,000 crores. The Finance Minister also said that further decisions would be taken regarding this allotment based on future needs.
2. Additional Rs. 23,220 crores for the public healthcare sector
It is a separate measure apart from the already stated credit guarantee scheme. Herein, the public healthcare system of this country receives an additional Rs. 23,220 crores to increase ICU beds, medical equipment, improve oxygen availability, etc. It will also elevate testing capacity and surveillance of genome sequencing.
3. ECLGS gets an additional Rs. 1.5 lakh crores
The Emergency Credit Line Guarantee Scheme will also receive additional funding of Rs. 1.5 lakh crores, per this announcement. This scheme was introduced as a section of the ‘Aatmanirbhar Bharat Package’ in 2020.
Additionally, the upper limit of the proposed loan amount and admissible guarantee will be above 20% level outstanding.
4. More allotments for NEIA and Export Insurance Account
According to this announcement, the Finance Ministry will allot an additional corpus of Rs. 33,000 crores to underwrite project exports over 5 years. Furthermore, the Export Insurance Account also gets Rs. 88,000 crores.
5. Financial assistance to boost the tourism sector
The FM ministry further stated that individuals in the tourism sector would receive personal loans and working capital loans to restart their business. This loan will be provided under the current loan guarantee scheme.
It will cover about 11,000 regional tourist guides registered under the Ministry of Tourism and the state governments.
Loans under this announcement are available against a 100% guarantee up to –
- 10 lakhs for stakeholders in the tourism business
- 1 lakh for individual guides registered with the Government at a central and state level
Moreover, processing charges and additional collateral are not necessary to obtain this loan.
Sitharaman mentioned that the first 5 lakh tourist visas would not incur any charge to boost the tourism sector. Following the commencement of visa issuance, this scheme will be applicable till 5 lakh visas are issued or 31 March 2022, whichever is earlier.
6. Extending the Aatmanirbhar Bharat Rozgar Yojana
This announcement included an extension of the Aatmanirbhar Bharat Rozgar Yojana from 30 June 2021 to 31 March 2022. This extension of nine months comes with a wage subsidy via EPFO (Employees Provident Fund Organisation). The approval presents an Rs. 22,810 crore subsidy for about 58 lakh beneficiaries with a monthly income under Rs. 15,000.
It aims to boost the creation of jobs, as it will increase the take-home pay of new employees and the ones joining after a lay-off due to Covid-19. In addition, it will reduce employee cost at the company’s end as the Government will subsidise statutory EPF dues.
7. New norms for PPP and asset monetisation
The Government will draft a new policy to formulate an approval and appraisal of PPP proposals. It is supposed to ensure a faster clearance of projects to facilitate more efficient project financing and management. This new policy will include InvITs.
The pointers above are some of the highlights from the honourable Finance Minister’s recent announcement. Other notable declarations from her announcement on Monday include affordable loans through micro-finance institutions, fertiliser subsidy, an extension of Pradhan Mantri Gareeb Kalyan Anna Yojana, a revival of North Eastern Regional Agricultural Marketing Corporation, and focus on improving farmer’s income through high-yielding crops, among others.