FM Sitharaman announces Covid-19 relief: Key takeaways

Nirmala Sitharaman announces Covid-19 relief: Key takeaways

Public health, agriculture and tourism sectors are among the beneficiaries

Finance Minister Nirmala Sitharaman. Credit: PTI Photo

Finance Minister Nirmala Sitharaman on June 28 announced relief measures for sectors affected by Covid-19, including Rs 1.1 lakh crore loan guarantee scheme among other schemes. She also reiterated schemes that were announced in the recent past and additional funding for some schemes.

FM Sitharaman announced Rs 50,000 crore loan to the health sector as part of the scheme aimed at upscaling medical infrastructure targetting areas that have been underserved. Maximum loan that an entity can take is Rs 100 crore and the duration of guarantee is a maximum of 3 years. Interest will be capped at 7.95 per cent. Other sectors will receive a guarantee of Rs 60,000 crore loan and interest rate will be a maximum of 8.25 per cent.

An additional Rs 1.5 lakh crore for emergency credit line guarantee scheme has been allocated. This was launched as part of the Atmanirbhar package in May 2020. Contact-intensive sectors will continue to be covered and Rs 4,000 crore has been given to such sectors so far. The maximum limit of admissible guarantee will be raised from Rs 3 lakh crore to Rs 4.5 lakh crore.

Read: Sitharaman announces financial support to tourism sector; 5 lakh tourists to get free visas

Sitharaman also announced a credit guarantee scheme to 25 lakh people through micro-finance institutions (MFI). Guarantee will be given to scheduled commercial banks for loans to new or existing NBFC-MFIs or other MFIs. The maximum amount will be Rs 1.25 lakh to about 25 lakh to small borrowers. “We aim to target smallest of the small borrowers,” said the FM.

Interest rate on loans for banks will be capped at 2 per cent over the MCLR. Maximum tenure for a loan will be 3 years and 80 per cent of assistance will be used by MFI for incremental lending. The finance minister said that the focus will be on new lending and not repayment of old loans. Defaulters up to 89 days will also be eligible, she said.

Aiming to revive tourism, 100 per cent guarantee of up to Rs 10 lakh for stakeholders and Rs 1 lakh for tourist guides at regional and state level will be given. This scheme will be administered by the Ministry of Tourism. Under the reliefs for the tourism sector, up to 5 lakh tourists will get free tourist visas. Benefit will be available only once per tourist and will be applicable till March 31, 2022 or till 5 lakh visas are issued. This will cost up to Rs 100 crore.

Finance Minister Sitharaman said that the Atmanirbhar Bharat Rozgar Yojana will be extended. The outlay for this would require Rs 22,810 crore and will benefit about 58.5 lakh people. A subsidy will  be provided for two years from registration for new employees who will be paid a monthly wage of under Rs 15,000. The scheme will be extended to March 31, 2022.

Sitharaman reiterated an additional subsidy for DAP and P&K fertilisers that was announced earlier.  The existing NBS subsidy which was Rs 27,500 crore in FY21 has been increased to Rs 42,275 crore in FY22. Additional amount of Rs 14,775 crore will be provided, includingRs 9,125 crore additional subsidy for DAP and Rs 5,650 crore additional subsidy for NPK-based complex fertiliser.

Another scheme that she reiterated was the extension of Pradhan Mantri Gareeb Kalyan Anna Yojana. The cost of the scheme was Rs 1.33 lakh crore last year. Estimated financial implication is Rs 93,869 crore and the total cost of the scheme is Rs 2,27,841 crore.

Focussing on health and paediatric care, the finance minister said that an additional Rs 23,220 crore will be allocated for public health. Funding for short-term augmentation of human resources is a part of the outlay. This will be used to ensure availability of ICU beds, oxygen supply, medicines, access to tele-consultation, ambulances, enhancing testing capacity, genome sequencing and surveillance, said the finance minister.

Nirmala Sitharaman said that from now, there will be a greater focus on nutrition value of crops, climate resilience and other traits and earlier the focus was on higher-yield crop varieties. ICAR has developed bio-fortified crop varieties having high nutrients like protein, iron, zinc, etc, she said.

A revival package of Rs 77.45 crore has been proposed for financial restructuring and infusion of funds to North Eastern Regional Agricultural Marketing Corporation (NERAMAC). NERAMAC will look to enhance agricultural procurement, processing, marketing and infrastructure for the Northeast. A prepared business plan will give a 10-15 per cent higher price to farmers bypassing middlemen and agents, said the finance minister.

The National Export Insurance Account will be given a boost of Rs 33,000 crore. An additional corpus will be given to NEIA over 5 years to allow it to underwrite additional Rs 33,000 crore of project exports. “In most African countries, countries in the Middle East, Indian project exports are doing very well,” said the Finance Minister.

A boost of Rs 88,000 crore will be given to export insurance cover in the form of an equity infusion in Export Credit Guarantee Corporation to promote merchandise exports by providing credit insurance services.

Sitharaman also announced an additional Rs 19,041 crore towards BharatNet which will provide broadband to villages through a PPP model. This comes after the PM’s address on August 15, 2020 where he said that all gram panchayats will have broadband in 1,000 days. This will bring the total outlay to Rs 61,109 crore.

The tenure for PLI scheme for large-scale electronics manufacturing has been extended by one year till 2025-26. The Finance Minister said that companies which are not able to achieve the target within the given time had many legitimate reasons. Some of the reasons are disruption in supply chain of components, restrictions in movement of personnel, among others.

Nirmala Sitharaman said that reforms-based, result-linked power distribution scheme of financial assistance to power distribution companies for infrastructure creating, upgradation of system will be revamped. The total allocation towards this is Rs 3.3 lakh crore and the Centre’s share will be Rs 97,631 crore. The program was announced in the Budget. States have already been allowed additional borrowing for four years up to 0.5 per cent of gross state domestic product annually, subject to carrying out specified power sector reforms.

The Finance Minister said that a new streamlined process for PPP projects and asset monetisation will be brought about adding that the current process is long and involves various levels of approval. She said that this new process will increase the speed of approvals to facilitate private sector’s efficiencies.

Check out DH latest videos:

Get a round-up of the day's top stories in your inbox

Check out all newsletters

Get a round-up of the day's top stories in your inbox