Fresh COVID relief of Rs 6.29 lakh crore announced by Finance Minister

The new economic relief package addresses the needs of sectors and areas that are most affected by the second wave of COVID-19.

Fresh COVID relief of Rs 6.29 lakh crore announced by Finance Minister

Union Minister of Finance Nirmala Sitharaman presented a slew of economic relief packages on 28 June 2021. Presented in the presence of the Minister of State for Finance Anurag Thakur, and Finance and Revenue secretaries, these were provided as a response to the effects of the second wave of the pandemic on the country’s economy. 

A total of seventeen measures, including two previously announced measures, were unveiled, which amounted to almost Rs 6.29 lakh crore. These measures include economic relief, public health expenditures, and growth and employment enhancing measures. 

Economic measures include financial aid to public health, tourism, and other affected sectors, credit guarantee schemes under Atmanirbhar Bharat and for microfinance institutions, farmer’s subsidies, and supply of free food grain. Health reforms will see enhancement of healthcare personnel, infrastructure, testing and medical facilities, and research.

Measures taken in the growth and employment includes the introduction of superior crop varieties and multiple schemes for export insurance. Production-linked incentive scheme is proposed for producers while DISCOMs will also see fund allocation. Nationwide broadband implementation is sought to be achieved at a grassroots level.

What are the economic measures announced?

  • Among the economic relief measures is a loan guarantee scheme for COVID-affected sectors. Rs 1.1 lakh crore has been allocated under this scheme, out of which Rs 50,000 crore is earmarked for the health sector. The remaining Rs 60,000 crore will be spent on sectors such as tourism.
  • The existing Emergency Credit Line Guarantee Scheme will see an additional allocation of Rs 1.5 lakh crore. Rs 2.73 lakh crore was previously allocated under this scheme last year when it was launched as a part of the Atmanirbhar Bharat Package.
  • A new Credit Guarantee Scheme for Micro Finance Institutions would provide credit guarantees to scheduled commercial banks for disbursing loans ranging from Rs 1.25 lakh to 25 lakh to small borrowers.
  • Scheme for tourist guides/stakeholders is another new scheme that will benefit 10,700 tourist guides and a further 1000 tourism stakeholders. 
  • Free visas for one month will be provided to the first 5 lakh tourists coming to India. It is expected to cost the government Rs 100 crore.
  • Atmanirbhar Bharat Rozgar Yojana has been extended from 30 June 2021 to 31 March 2022. 
  • Subsidy to farmers for DAP and P&K fertilizers has been expanded from Rs 27,500 crore in the previous financial year to Rs 42,275 crore in the current financial year.
  • The provision for free food grain under the Pradhan Mantri Garib Kalyan Yojana has been extended from May 2021 to November 2021. This will escalate the government expenditure on this scheme from Rs 93,869 crore to Rs 2,27,841 crore.

How is public health going to be strengthened?

Under the public health measures, a total fund of Rs 23,220 crore was announced. This would go towards augmentation of medical and nursing students, ICU beds, oxygen supply at the grassroots level, teleconsultation, testing and diagnostics, surveillance capacity enhancement, genome sequencing, and ambulance services.

What are the new growth and employment measures?

As many as eight schemes have been undertaken to focus on growth and employment:

  • Release of climate-resilient crop varieties. These varieties will aim to be resistant to pests, floods, drought, salinity, insects, and diseases. About 21 varieties of such crops will be offered to farmers. ICAR is leading the development of bio-fortified varieties with high nutrient value.
  • The North Eastern Regional Agricultural Marketing Corporation will be revived with a package of Rs 77.45 crore. It focuses on the agricultural, processing, procurement, and marketing assistance of North-Eastern agricultural and horticultural products.
  • National Export Insurance Account will see a cash injection of Rs 33,000 crore to provide risk cover to project exports. 
  • Export Credit Guarantee Corporation will be providing export insurance cover of Rs 88,000 crore for the next five years. 30% of India’s merchandise exports stand to benefit from it.
  • The BharatNet PPP model will see the broadband network expand to all 2.5 lakh gram panchayats and inhabited villages. An amount of Rs 19,041 crore has been allocated for this Digital India coverage.
  • Production-Linked Incentive scheme of 4%–6% will be provided on incremental sales of goods for five years starting from 2019-20. This indicates an extension of the scheme by one year till 2025-26.
  • A Reform-Based Result-Linked Power Distribution Scheme will provide financial aid to DISCOMs. Rs 3.03 lakh crore will help these companies to improve their infrastructure, upgrade their systems and capacity, and ensure overall process improvement.
  • Approval of PPP and asset monetisation projects will be streamlined to ensure faster clearance.
     

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