India’s FM Announces Rs 1.7 Trillion Relief Package

Economy

India’s FM Announces Rs 1.7 Trillion Relief Package

The FM announced a slew of measures to ease the burden on the poor who will be hit hard by the lockdown. India’s finance minister Nirmala Sitharaman has announced a slew of measures to deal with the economic distress caused due to the coronavirus pandemic and the subsequent lockdown announced to deal with the situation. The finance minister had already announced some measures on Tuesday that included extension of tax deadlines, easing minimum balance norms for savings account, and increasing threshold of insolvency filing to Rs 1 crore from Rs 1 lakh. Highlights of the package announced today:

It will include both cash transfer and food security.
Provide insurance cover worth Rs 50 lakh for sanitation workers, ASHA workers, doctors, nurses, paramedics in case they need it as they are on the frontlines of the corona battle.
Over and above 5kg of rice/wheat that is already given, another 5 kg per person will be given free to around 80 crore people through PDS. Besides, one kg of preferred and region specific choice of pulse will also be given.

Direct cash transfer through DBT

Farmers: First installment of Rs 2,000 of PM Kisan scheme will be given in first week of April. 8.69 crore farmers will get immediate benefit out of it.
MNREGA: Increase in wage rate from Rs 182 to Rs 202 amounting to increase of Rs 2000 per worker, benefitting 5 crore people.
Old age/widows: An ex-gratia amount of Rs 1,000 for next three months available in two instalments. It will benefit 3 crore widows and senior citizens.
Women Jan Dhan account holders: Ex gratia of Rs 500 per month for next three months. This will benefit 20 crore women.
Women Ujjawala sheme beneficiaries: For three months, free cylinders. Will benefit 8.3 crore BPL families.
Women Self Help Groups: Under the Deen Dayal National Livelihood Mission, collateral free loan will be given up to Rs 20 lakh from Rs 10 lakh earlier. Impact on 7 crore holders through 63 lakh SHGs.
Organised sector: Government of India will pay 24% of the EPF contribution both of the employer and the employee put together, for the next three months. This is for those establishments with up to 100 employees, 90% of them earning less than Rs 15,000.
For organised sector, EPFO regulation will be amended so that workers can draw up to 75% for their contingency expenditure non-refundible advance or three months of wages in advance whichever is less. This will benefit 4.8 crore workers.
Construction workers: State governments have been directed to use the welfare fund for building and construction labourers which has around Rs 31,000 crore to help those who are facing economic disruption because of the lockdown.
Utilise the funds available under the district mineral fund for testing activities, medical screening, providing health attention needed to fight the coronavirus pandemic.

The Confederation of Indian Industry (CII) lobby group, had sought a stimulus of about 1% of the GDP or Rs 2 lakh crore, has sought a three-month moratorium on all loans and said all repayment obligations should be suspended for this period. The Prime Minister had announced an Economic Task Force to be chaired by the finance minister. The 21-day lockdown announced by Prime Minister Narendra Modi will affect the revenue stream of companies and hit hard their bottomlines. Various rating agencies have revised downwards their Q4 economic growth projections and also the growth estimates for the next fiscal year FY21. The measures come at a time when the US Senate has passed the US$ 2 trillion aid package for the US economy that has been hit hard by the coronavirus pandemic.