The Center has announced a relief package of Rs 6,28,993 crore to support the Indian economy in fight against COVID-19 pandemic. The relief package also aims to prepare the health systems for emergency response and provide impetus for growth and employment.
A total of 17 measures amounting to Rs. 6,28,993 crore were announced. These included two measures announced earlier, i.e. the additional Subsidy for DAP & P&K fertilizers, and extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) from May to November, 2021. The 17 measures are as follows:
- Rs 1.1 lakh crore loan guarantee scheme for COVID affected sectors
- Additional Rs 1.5 lakh crore for Emergency Credit Line Guarantee Scheme
- Credit Guarantee Scheme to facilitate loans to 25 lakh persons through Micro Finance Institutions (MFIs)
- Financial support to more than 11,000 Registered Tourists/ Guides/ Travel and Tourism Stakeholders
- Free one-month Tourist Visa to first 5 lakh tourists
- Extension of Aatma Nirbhar Bharat Rozgar Yojana till 31st March 2022
- Additional subsidy of Rs. 14,775 crore for DAP & P&K fertilizers
- Extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) – Free food grains from May to November, 2021
- Rs. 23,220 crore more for public health with emphasis on children and pediatric care/pediatric beds
- 21 varieties of the bio-fortified crop for nutrition, climate resilience, and other traits to be dedicated to the nation
- Revival of North Eastern Regional Agricultural Marketing Corporation (NERAMAC) with a package of Rs 77.45 crore
- Rs. 33,000 crore boost for project exports through National Export Insurance Account (NEIA)
- Rs. 88,000 crore boost to Export Insurance Cover
- Rs. 19,041 crore For Broadband to each Village through BharatNet PPP Model
- Extension of Tenure of PLI Scheme for Large Scale Electronics Manufacturing till 2025-26
- Rs 3.03 lakh crore for Reform-Based Result-Linked Power Distribution Scheme
- New Streamlined Process for PPP Projects and Asset Monetization
Out of the above 17 scheme, Some of the key schemes are:
Loan Guarantee Scheme:
Under this scheme, an additional credit of Rs 1.1 lakh crore will flow to the businesses. This includes Rs 50,000 crore for the health sector and Rs 60,000 crore for other sectors, including tourism.
The guarantee cover will be available both for expansion and new projects related to health/medical infrastructure in cities other than 8 metropolitan cities. The guarantee cover will be 50% for expansion & 75% for new projects.
In the case of aspirational districts, the guarantee cover of 75% will be available for both new projects and expansion. The maximum loan admissible under the scheme is Rs. 100 crore and guarantee duration are up to 3 years. Banks can charge a maximum interest of 7.95% on these loans.
Loans for other sectors will be available with an interest cap of 8.25% p.a. Thus the loans available under the scheme will be much cheaper compared to the normal interest rates without a guarantee of 10-11%.
Emergency Credit Line Guarantee Scheme (ECLGS):
The government has decided to expand the Emergency Credit Line Guarantee Scheme (ECLGS), launched as part of “Aatma Nirbhar Bharat Package” in May, 2020, by Rs 1.5 lakh crore.
ECLGS has got a very warm response with Rs 2.73 lakh crore being sanctioned and Rs 2.10 lakh crore already disbursed under the scheme. Under the expanded scheme, the limit of admissible guarantee and loan amount is proposed to be increased above the existing level of 20% of outstanding on each loan. Sector-wise details will be finalized as per evolving needs. The overall cap of admissible guarantee is thus raised from Rs. 3 lakh crore to Rs. 4.5 lakh crore.
Additional Subsidy for DAP & P&K fertilizers:
Keeping the interest of farmers in mind, the central government has come up with an additional subsidy to farmers for DAP and P&K fertilizers. The existing NBS subsidy was Rs. 27,500 crore in FY 2020-21 which has been increased to Rs. 42,275 crore in FY 2021-22.
Thus, the farmers will benefit by an additional amount of Rs. 14,775 crore. This includes Rs. 9,125 crore additional subsidy for DAP and Rs. 5,650 crore additional subsidy for NPK based complex fertilizer.
Public health with emphasis on children and pediatric care/pediatric beds:
The new scheme will focus on short-term emergency preparedness with special emphasis on children and pediatric care/pediatric beds. An outlay of Rs. 23,220 crore is earmarked for the scheme to be spent in the current financial year itself.
Under the scheme funds will be available for short-term HR augmentation through medical students (interns, residents, final year) and nursing students; increasing availability of ICU beds, oxygen supply at central, district, and sub-district level; availability of equipment, medicines; access to teleconsultation; strengthening ambulance services; and enhancing testing capacity and supportive diagnostics, strengthen capacity for surveillance and genome sequencing.
Boost for Project Exports through National Export Insurance Account (NEIA):
National Export Insurance Account (NEIA) Trust promotes Medium and Long Term (MLT) project exports by extending risk covers. NEIA provides covers to buyer’s credit, given by EXIM Bank, to less credit-worthy borrowers and supporting project exporters.
NEIA Trust has supported 211 projects of Rs 52,860 crore in 52 countries by 63 different Indian Project Exporters till March 31, 2021. It has been decided to provide additional corpus to NEIA over 5 years. This will enable it to underwrite additional Rs. 33,000 crore of project exports.
Boost to Export Insurance Cover:
Export Credit Guarantee Corporation (ECGC) promotes exports by providing credit insurance services. Its products support around 30% of India’s merchandise exports. It has been decided to infuse equity in ECGC over 5 years to boost export insurance cover by Rs. 88,000 crore.
Out of 2,50,000 Gram Panchayats, 1,56,223 Gram Panchayats have been made service ready by 31st May, 2021. It is proposed to implement BharatNet in PPP model in 16 States (bundled into 9 packages) on viability gap funding basis.
For this, an additional Rs. 19,041 crore will be provided. Thus, the total outlay under BharatNet will be enhanced to Rs. 61,109 crore. This will enable the expansion and up-gradation of BharatNet to cover all Gram Panchayats and inhabited villages.
Extension of PLI Scheme:
PLI (Production Linked Incentive) scheme provides an incentive of 6% to 4% on incremental sales of goods under target segments that are manufactured in India, for a period of five years. Incentives are applicable from 01.08.2020 with the base year of 2019-20.
However, the companies have been unable to achieve incremental sales conditions due to disruption in production activities due to pandemic-related lockdowns; restrictions on the movement of personnel; delay in installation of relocated plant and machinery; and disruption in the supply chain of components.
Therefore, it has been decided to extend the tenure of the scheme launched in 2020-21 by one year i.e. till 2025-26. Participating companies will get the option of choosing any five years for meeting their production targets under the scheme. Investments made in 2020-21 will continue to be counted as eligible investments.
Result-Linked Power Distribution Scheme:
Revamped Reforms-Based, Result-Linked power distribution scheme of financial assistance to DISCOMS for infrastructure creation, up-gradation of system, capacity building and process improvement was announced in the Union Budget of 2021-22.
It aims at state-specific intervention in place of “one size fits all”. Participation in the scheme is contingent on pre-qualification criteria like the publication of audited financial reports, upfront liquidation of State Government’s dues/subsidy to DISCOMS, and non-creation of additional regulatory assets.
Under the scheme, it is aimed to provide assistance for the installation of 25 crore smart meters, 10,000 feeders, 4 lakh km of LT overhead lines. Ongoing works of IPDS, DDUGJY, and SAUBHAGYA will also be merged into the scheme. The total outlay for the scheme is Rs. 3,03,058 crore, out of which the Central Government’s share will be Rs. 97,631 crore.
The amount available under the scheme is in addition to the allowed additional borrowing of 0.5% of Gross State Domestic Product which will be available to the States annually for the next four years subject to carrying out specified power sector reforms. The amount of borrowings available this year for this purpose is Rs 1,05,864 crore.
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