By Satish Singh
Finance Minister Nirmala Sitharaman made several announcements on June 28 to provide relief to the public and businessmen affected by the Corona Pandemic. The banks will play an important role in implementing these relief measures. In this package, some old schemes have been expanded and some new schemes will be implemented. The total amount of relief package is Rs 6,28,993 crore.
The government has announced a guarantee cover of Rs.50 thousand crore out of Rs.1.1 lakh crore to strengthen the health infrastructure and a provision of Rs.60 thousand crore has been made for other areas affected by the corona pandemic. Under this scheme loan can be given up to a maximum of Rs.100 crore. Interest will be charged at the rate of 7.95 percent on loans related to health sector, while interest at the rate of 8.25 percent will be charged on loans given to other sectors. The government will spend Rs.23220 crore on health services related to children till March 31, 2022. With this amount, facilities like ICU beds, ventilator beds, ambulances etc. will be augmented. Apart from this, the availability of oxygen cylinders will be increased at the district and sub-district level. Also, facilities like testing capacity and teleconsultation will be amplified, so that the spread of corona pandemic can be controlled.
The Emergency Credit Line Guarantee Scheme (ECLGS) was launched in the month of May last year. Under ECLGS, a provision was made to give loan amount up to Rs. 3 lakh crore to eligible Micro, Small, Medium Enterprises (MSME) units. Including ECLGS 1.0, 2.0, 3.0, so far Rs.2.69 lakh crore, which is 90 percent of Rs.3.00 lakh crore, has been disbursed among 1.1 crore MSME units. Significantly, there are about 6.3 crore MSME units across the country. In this way, still many MSME units are deprived of taking advantage of this scheme. Therefore, an additional loan of Rs.1.5 lakh crore under ECLGS has been announced to the MSMEs affected by the corona pandemic, so that the MSMEs who have not taken advantage of this scheme till now can take advantage of this scheme.
Small business and non-banking financial company (NBFC) Micro Finance Institute (MFI) will be given assistance up to Rs.1.25 lakh crore in the form of loan, on which interest will be charged by adding a maximum of 2 percent on the Bank’s Marginal Cost of Funds Based Lending Rates (MCLR). The tenure of such loan will be 3 years and the government will give a guarantee of 75 percent on it. Borrowers, who have not paid their loan instalment and interest for 89 days, will also be eligible to take advantage of this scheme. Twenty-five lakh people are expected to benefit from this scheme. The government has made a provision of Rs.7500 crore for this scheme, the benefit of which can be availed till March 31, 2022.
According to the data of World Travel and Tourism, the contribution of travel and tourism to GDP was 6.9 percent in the year 2019, which decreased to 4.7 percent in the year 2020. Not only this, employment in this sector has come down from 4.01 crore to 3.18 crore, which shows a decline in employment of 20.8 percent in this sector. Therefore, there was a need to provide relief with immediate effect to strengthen this sector. Therefore, the government will provide 100 percent guarantee on loans up to Rs.10 lakh which will be given to 904 registered tourist guides and travel tourism stakeholders affected by the corona pandemic. In this connection, 100 percent guarantee will also be given on loan of Rs.1 lakh to 10700 licensed tourist guides who are registered at the local or state level. Processing fee will also not be charged on such loans.
To encourage foreign tourists to visit India, visas will be issued free of cost to the first 5 lakh foreign tourists, which will cost the exchequer Rs.100 crore. A tourist will get the benefit of this scheme only once. This scheme will be applicable till 31 March 2022. Foreign tourists will start to get the benefit of this scheme as soon as they get visa permission. It is worth noting that in the year 2019, about 193 million foreign tourists came to India and they spent more than $ 30 billion in India. Foreign tourists visiting India usually stay for 21 days and they spend an average of $34 per day, or about Rs 2500.
Self-reliant India Employment Scheme was started last year under Atmanirbhar Bharat 3.00 in October,2020, validity of which has been increased to 31 March 2022. Under this scheme, Rs.902 crore has been spent so far on 21.42 lakh beneficiaries, which has benefited 79577 units till June 18, 2021. Under this scheme, the government pays the provident fund of employees and companies earning less than 15 thousand salary. The government has set a target of spending Rs 22,810 crore on this scheme, which will benefit about 58.50 lakh people.
The government has given an additional subsidy of Rs.14,775 crore to farmers, out of which subsidy of Rs 9,125 crore has been given on DAP or Di-Ammonia Phosphate fertilizers, while subsidy of Rs.5,650 crore has been given on NPK or Nitrogen, Phosphorous and Potassium based fertilizers.
To help the poor affected by the Corona pandemic, the government had announced the Pradhan Mantri Garib Kalyan Anna scheme on 26 March 2020 last year and its benefit was given to the poor for the first-time during April to June 2020. Later the duration of this scheme was extended till November 2020. In the financial year 2020-21, Rs.1,33,972 crore was spent on this scheme. The scheme was restarted in May 2021. Under this scheme, about 80 crore people will be given 5 kg food grains free of cost till November 2021, which will cost around Rs.93,869 crore this year. About Rs. 2,27,841 crore will be spent on this scheme together last year and this year.
Exports have also been negatively affected due to the Corona pandemic. Exports have registered a decline of 7.3 percent during the financial year 2020-21, amounting to US$ 290.6 billion. Therefore, the government will aid Rs.33000 crore to exporters through National Export Insurance Account (NEIA) and will also provide export insurance cover of Rs 88 thousand crore to accelerate exports, which will be provided by Export Guarantee Corporation. About 30 percent exporters of the country will get benefit from this provision.
Under the Bharatnet Broadband Scheme, Rs.19041 crore will be spent to provide internet to every village. The objective of this scheme is to provide the facility of broadband connectivity to all the villages of the country. It is worth noting that till May 31, 2021, out of 2.50 lakh gram panchayats, the facility of broadband connectivity has been provided to 1,56,223 villages.
Rs.3.03 lakh crore will be given for reforms in the power sector. With this amount, the infrastructure related to electricity distribution will be strengthened. Under this scheme, 25 crore smart meters, 10 thousand feeders and LT overhead lines will be installed for smooth transmission of electricity up to 4 lakh kilometers. The government will come out with a new policy for Public Private Partnership (PPP) projects and asset monetization, which will expedite the implementation of PPP projects. The current process is very lengthy and requires multiple levels of approvals, taking longer time to complete the projects and thereby increasing the cost of the project. Asset monetization policy will help to sell off various properties which are kept idle for long time.
The second wave of corona virus occurred even before the full recovery from the difficulties caused by the first wave of the corona pandemic, affecting the ongoing corrective measures in the economy and bringing economic activities to a standstill. Also, many employment opportunities were reduced. Health, tourism, MSMEs, farmers etc. were most affected by the second wave. Therefore, keeping these aspects in view, the government announced a relief package, so that the economic condition of the affected institutions and people may improve.
(Author is Chief Manager at State Bank of India, Mumbai. The views expressed are personal opinion of the author. He can be reached at firstname.lastname@example.org and email@example.com.)