April 19, 2024


Delighting finance buffs

Stimulus package Day 2: Free food, credit & housing in focus as govt unveils sops for migrants, farmers

Finance Minister Nirmala Sitharaman on Thursday announced the second tranche of measures to revive the economy hit hard by novel coronavirus outbreak. The second set of measures, part of the Rs 20-lakh crore package announced by Prime Minister Narendra Modi on Tuesday, included provisions for migrant workers, small farmers, urban poor, small traders, street vendors, tribals and lower-middle-income group.

The package announced by FM Sitharaman on Thursday totals to Rs 3.16 lakh crore and includes sops like free food grains for migrant workers, concessional credit to farmers and working capital loan for street vendors. The government also plans to give the real estate sector a boost by providing a one-year extension of subsidised loan for affordable houses for the middle-income group.

Prime Minister Narendra Modi had on Tuesday announced a cumulative package of Rs 20 lakh crore (nearly 10 per cent of GDP) to provide relief to various segments of the economy. This included Rs 1.7 lakh crore package comprising of free food grains and cash to poor for three months announced in March, and Rs 5.6 lakh crore stimulus provided through various monetary policy measures by the Reserve Bank of India (RBI).

Also read | Second tranche of economic package: Sops for migrants, urban poor, small farmers, street vendors

The remaining of the Rs 20 lakh crore package is being announced in tranches – Nirmala Sitharman had in the first tranche on Wednesday unveiled a Rs 5.94 lakh crore plan that mostly comprises of off-budget items such as Rs 3 lakh crore of credit line to small businesses as support to shadow banks and electricity distributors. Off-budget items do not result in any outgo from the government exchequer but these will aid in easing liquidity constraints for businesses once the lockdown is lifted.

Here is a glimpse of the second tranche of economic measures announced by Nirmala Sitharaman:

For migrants

The government on Thursday claimed that it was sensitive towards the plight of migrant workers who were walking on foot to get back home or had lost their jobs due to the lockdown. Finance Minister Nirmala Sitharaman said that the Centre has already allowed states to use SDRF to set up shelters and is providing three meals a day to migrants. “Rs 11,000 crore has been given to states for taking care of migrant workers and others 3 meals per day for urban homeless, entirely at expense of central government. We are conscious, we are attending to the migrants and giving them in various different ways,” she said.

To further ease their burden, Finance Minister Nirmala Sitharaman said 8 crore migrant workers will get 5 kgs of grains and 1 kg of pulses free for two months. Sitharaman said the central government will bear Rs 3,500 crore cost of giving free food grain and pulses to migrant workers. State governments will be responsible for implementation, identification of migrants and full distribution.

Also to benefit of migrant workers, the government plans to allow inter-state portability of ration cards under the public distribution system (PDS) so as to allow them to use their cards anywhere to get the benefit.

Changes in labour laws

The finance minister also said that the states and UTs have been asked to undertake drives to employ returning migrants under MNREGA provisions.

The government is also working to make Right to Minimum Wages universal as well remove disparities in it. The finance minister also said that the labour codes are being changed for the benefit of the workers. A social security scheme is being introduced for gig workers and platform workers along with a re-skilling fund. The government plans to extend ESIC coverage in all districts with annual health check-up for employees.

For urban poor

Apart from the benefits for migrant workers, the Centre also announced measures to help other urban poors. The finance minister said that the government plans to give a working capital loan of Rs 10,000 each to street vendors rendered jobless by the lockdown. Digital repayments of the loan will be incentivised and will make them eligible for a future loan, the finance minister said. The scheme would cost Rs 5,000 crore to the Centre, she said.

FM Sitharaman also introduced a PPE model plan for affordable rental housing for the poor. The scheme will be launched under PM Awas Yojna. This will convert government-funded housing in the cities into affordable rental housing complexes under PPP model.

For small farmers

Finance Minister Nirmala Sitharaman said that the government has been providing liquidity support to farmers and the rural economy for the past two months. She said that during the lockdown period 62 lakh farmers have availed loans aggregating Rs 86,600 crore.

In addition to that, the government on Thursday announced that NABARD will provide Rs 30,000 crore additional emergency working capital funding for farmers through rural cooperative banks and regional rural banks. This will help farmers fulfill post-harvest (Rabi) and current Kharif crop requirements in May and June, she said.

The government has also extended the interest subvention and prompt repayment incentive on crop loans due from March 1 to May 31.

Apart from that, as many as 2.5 crore farmers will be provided Rs 2 lakh crore of concessional credit through Kisan Credit Cards.

For small traders

Finance Minister announced that small traders who have borrowed money under Mudra-Shishu plan, that entails a loan amount of up to Rs 50,000, can avail a 2 per cent interest subvention on prompt payment of EMIs for 12 months. It means that Mudra-Shishu loan payees can get an interest relief of 2 per cent if they pay their EMIs on time for 12 months. The FM said that the scheme is likely to give a relief of Rs 1,500 crore to the beneficiaries.

For middle-income group

For the lower strata of the middle-income group, that is people with an annual income of Rs 6 lakh to Rs 18 lakh, Finance Minister Nirmala Sitharaman announced a one-year extension of subsidised loan for affordable houses. The scheme was originally announced for three years in 2017, now it is being extended for another year. The FM said that the extension will provide a Rs 70,000 crore boost to the housing sector and will also generate demand and employment.

For tribals

The government announced Rs 6,000 crore Compensatory Afforestation Management and Planning Authority (CAMPA) funds to be given to the state governments for job creation among tribals. The state government can use this money to start afforestation and plantation works, forest conservation or related works. The government says that this fund will create jobs for tribals and adivasis.

India had – beginning March 25 – imposed a three-week-long nationwide lockdown, the most far-reaching measure undertaken by any government to curb the spread of the pandemic. The lockdown, which brought most of the economic activity to a standstill as factories and businesses shut while rendering thousands temporarily unemployed, has since been extended twice through May 17, with some relaxations to allow the resumption of economic activity. According to estimates, the lockdown may have led to 12.2 crore people losing jobs in April and consumer demand evaporating.

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