India is seeing a “strong recovery” taking root in the economy, as seen by increased goods and service tax collections and other metrics, Finance Minister Nirmala Sitharaman said on Thursday.
The recovery is not due to just pent-up demand, Sitharaman told a news conference, ahead of announcing a new set of stimulus measures.
Sitharaman announced a new set of stimulus measures to boost employment under Atmanirbhar Bharat Rozgar Yojna to incentivise the creation of new employment opportunities. The new announcements aim at benefitting companies and individuals, who lost their jobs due to Covid-19 induced lockdown.
Under the scheme, if companies bring in employees who had lost their jobs between March 1, 2020 and September 30 or new employees who get registered in EPFO they will be entitled to benefits under the new announcement. To avail of befits under this scheme, the organisations with fewer than 50 employees will have to hire at least two employees, and those with more than 50 employees will have to hire 5 or more.
Here are highlights from her press conference:
Government to give Rs 900-crore support for R&D to help develop a Covid-19 vaccine; funds to be given to the biotech department
- I-T relief for home buyers: For residential units worth up to Rs 2 crore, differential allowed between agreement value and circle rate has been increased from 10% to 20% till June 30, 2021.
- Infusion of equity in NIIF debt platform: Rs 6,000 crore of equity to be provided to the debt platform. By 2025, they will have to fund projects worth Rs 1,10,000 crore
- PM Awas yojana (Urban): Rs 18,000 crore to be provided over and above the Budget announcement to help 1.2 million houses be grounded and 1.8 million houses be completed
- To give relief to contractors in the construction and infra sectors, performance security deposit reduced to 3% till Dec 31, 2021, for projects without any dispute.
- Extension of Rs 3 trillion Emergency Credit Line Guarantee Scheme till March 31, 2020
- Announcement of ECLGS 2.0 for 26 stressed sectors identified by Kamath Committee
- Rs 1.46 trillion boost for manufacturing Production Linked Incentives (PLI) for 10 champion sectors
- Rs 18,000 crore additional outlay sanctioned for PM Awas Yojna
- Relaxation of performance security on contracts from 3% to 5% to support real estate and infrastructure
- Increase differential between circle rate and agreement value from 10% to 20% till June 30, 2021 under Income Tax Act
- Rs 1.10 trillion platform for infra debt financing and Rs 6,000 crore equity infusion in NIIF debt platform by govt
Job Guarantee Scheme
- Govt to provide Rs 65,000-crore fertiliser subsidy to farmers, move to benefit 14 million farmers
- Rs 10,200-cr additional Budget outlay to promote industries and create industrial infra under Aatmanirbhar Bharat
- FM announces Atmanirbhar Bharat Rozgar Yojana, aimed at incentivising creation of employment opportunities during Covid-19 recovery phase
- Beneficiaries under this new scheme will include: new employees joining employment in EPFO-registered establishments on monthly wages less than Rs 15,000, and EPF members drawing monthly wage of less than Rs 15,000 who exited employment during March-September, and employed on or after October 1
- Central government to give subsidy on new employment
- Employee and employer contribution of 12% each to be borne by government, for next two years; aimed at easing financial burden on companies for creating jobs
- 95% of all (organised sector) establishments estimated to be covered under this scheme will have employees up to 1,000
Emergency Credit Line Guarantee Scheme (ECLGS) extended till March 31, 2021 (collateral-free, fully guaranteed loan)
- MSMEs, business enterprises, individual loans for business purposes, MUDRA borrowers eligible for this scheme
- Rs 2.05 trillion already sanctioned to 61 lakh borrowers under this scheme, Rs 1.52 trillion disbursed, as of November 12
ECLGS 2.0 - for supporting stressed sectors - to be utilized for 100% guaranteed collateral free additional credit at capped interest rate
The new announcements comes a day after the government approved a Rs 1.45-trillion package by extending the production-linked incentive (PLI) scheme to 10 more sectors. The latest approval is in addition to the already announced Rs 51,311-crore PLI for three sectors. With this, the total incentives under the PLI schemes come to Rs 2 trillion.
The government hopes that the PLI schemes would provide 200,000-300,000 direct employment over five years, according to sources in the know.
Among the 10 sectors approved on Wednesday, the largest chunk of the incentives, at over Rs 57,000 crore, would go to automobile and automobile components businesses followed by ACC battery at over Rs 18,000 crore.
Briefing reporters after the meeting on Wednesday, finance minister Nirmala Sitharaman had said, "We are yet again proving that the policy that we are taking up even in PLI through which we want manufacturers to come to India is clearly to say we want to build on our strength but yet link with the global value chains."
The last stimulus package in May largely failed to soften the blow of the strict coronavirus lockdown as it focused on providing liquidity and collateral-free credit for small businesses but with little actual spending. It also left out badly hit sectors such as tourism, hospitality, and aviation.
The Indian economy, which the International Monetary Fund singled out as a global bright spot only a few years ago, contracted a hefty 23.9 per cent in the April-June quarter and is seen contracting over 10 per cent in the fiscal year to March 2021.
Meanwhile, the coronavirus cases are still surging in major Indian cities and the country has been adding over 40,000 cases a day.