Finance Minister announces second phase of the economic package for COVID-19 relief
The Finance Minister Nirmala Sithraman on May 14, 2020 through a press conference, shared further details on economic benefits under the mission of Atma Nirbhar Bharat announced by the Prime Minister. This is the 2nd round of announcements. While yesterday’s provisions were majorly directed towards the MSMEs, today’s provisions were focused on:
1. Migrant workers
2. Small farmers
3. Street vendors
4. Small business owners
5. Self employed
The finance minister made a total of 9 announcements: 3 for migrant workers, 2 for small farmers, 1 for street vendors, 1 for small businesses, 1 for housing for the lowest strata of the middle class and 1 for employment generation for tribal workers.The finance minister also reassured that there will be provisions for everyone in the package as it is announced. The government is aware of the suffering of the people. However, there might also be overlaps in the schemes.
Recap of some of the government activities provided during the pandemic:
Direct Support to Farmers & Rural Economy provided post COVID:
• 3 crore farmers availed loans given to them at concessional rates which amounted to Rs. 4 lakh crores of credit given to them and those who availed have also given a moratorium from RBI.
• The interest subvention and prompt repayment initiative on crops due from March 1, 2020 extended up to May 31, 2020.
• 25 lakhs new kisan credit cards sanctioned with a limit of Rs. 25,000 crore.
Liquidity support in the last two months:
• 63 lakh loans of Rs. 86,600 crores have been approved in agriculture between March 1, 2020 to April 30, 2020.
• In March alone NABARD has refinanced Rs. 29, 500 to cooperative and regional rural banks.
• Rs. 4200 crores provided under rural infrastructure development fund to states during March 2020 for rural infra
• Working capital limit of Rs. 6,700 crores for procurement of agriculture produce to state government entities in March 2020
Support for migrant and urban poor during last 2 months
• Government of India has permitted the state governments to use state disaster response fund, funded by the center, amounting to Rs. 11002 crores for setting up shelters for migrants and providing them with food and water.
• The shelters provide hygienically prepared three meals day for the urban homeless.
• 12,000 Self Help Groups (SHGs) produced 3 crore masks and 1.20 lakh liters of sanitizers thus giving them employment opportunities.
• Dispersal of revolving fund to SHGs was on boarded using the PAiSA portal in April 2020 on a pilot basis in Gujarat and is now being rolled out in other states.
• 7,200 new self-help groups of urban poor have been formed during the period starting march 15,2020
MGNREGS support to returning migrants
• 14.62 crore person days of work generated till May 13, 2020.
• Actual expenditure till date is Rs. 10,000 crores.
• Work offered to 2.53 crores wage seekers in 1.87 lakh gram panchayats.
• 40-50% more people enrolled than last year.
• Average wage rate rose to Rs. 202 from Rs. 182 in last financial year.
• State and UTs advised to provide works to migrant workers as per the provisions of the Act.
• Planning for continuing MNREGA works in monsoon as well as plantations, horticulture, livestock related sheds.
Labor codes: Benefits for workers; following changes are in the pipeline):
1. Minimum wages applicable only to 30% workers. Want to extend the right to everyone universally.
2. Regional disparity in minimum wage to be done away with. Introduction of a national floor wage concept.
3. Compulsorily giving formal appointment letters for all employees.
4. Compulsory health checkups.
5. Occupational safety and health code also applicable to establishments engaged in work of hazardous nature even with threshold of less than 10 workers.
6. Definition of interstate migrant workers to be established.
7. Portability of welfare benefits for migrant workers.
8. Extension of ESIC coverage pan India to all establishments having more than 10 workers, with less than 10 workers making it voluntary.
9. Mandatory ESIC coverage through notification by central gov for employees in hazardous industries even with less than 10 workers.
10. Social security schemes for gig and platform workers.
11. Reskilling fund for retrenched workers.
12. All occupations to be opened for women with night working permission with safeguards.
13. Provision for social security fund for unorganized workers.
14. Gratuity for fixed term employment: provision of gratuity on completion of one-year service instead of 5.
Key highlights of the new provisions of the economic package:
1. Free food grain supply to migrant workers for 2 months: The older free provisions will hold; however non-card holders will be provided with 5kg of grains per person and 1kg chana per family per family per month for two months. 8 crore migrants are expected to benefit from this. Rs. 35000 crores will be spent by the center, state government will be the implementing agencies.
2. Technology systems to be used for enabling migrants to access Public Distribution System (Ration) from any Fair Price Shop in India by March 2021- One Nation One Ration Card. This is part of the PM’s technology driven system reforms. 67 beneficiaries in 23 states covering 83% of the PDS population will be covered by the national portability by August 2020. 100% will be achieved by March 2021.
3. Affordable Rental Housing Complexes (ARHC) for migrant workers/urban poor: Government will launch a scheme under PMAY (Pradhan Mantri Awas Yojana) for migrant labor/urban poor to provide ease of living at affordable rent by:
a. Converting government funded housing in the cities into ARHC under PPP mode.
b. Incentivizing manufacturing units, industries, institutions, and associations to develop ARHC on their private land.
c. Incentivizing state government agencies/ central government agencies to develop ARHC.
1. Rs. 1500 cr. interest subvention for MUDRA-Shishu Loans: Small businesses under MUDRA have been disrupted and their capacity to pay has also been impacted. Loan moratorium has already been granted by RBI. The current portfolio of MUDRA-Shishu loans is Rs. 1.62 lakh crore (max loan amount of Rs. 50,000). Government of India will provide interest subvention of 2% for prompt payees for a period of 12 months.
1. Government will launch a special scheme within a month to facilitate easy access to credit to street vendors. Initial working capital up to Rs. 10,000. This will benefit 50 lakh street vendors and will provide liquidity of Rs. 5000 crores. Digital payments will be incentivized through monetary provisions and enhanced working capital credit would be made available for good repayment behavior.
Lowest strata of middle-income group: 6L-18L annual income:
1. Rs. 70,000 crore boost to housing sector and middle income group through extension of Credit Linked Subsidy Scheme (CLSS). The CLSS was operationalized from May 2017. The scheme is now extended up to March 2021. This will benefit 2.5 lakh middle income families during 2020-21 and will also create more jobs. Additionally, it will stimulate demand for steel, cement, transport, and other construction materials
1. Rs. 6000 crore employment push using CAMPA funds: Compensatory Afforestation Management and Planning Activity set up under Compensatory Afforestation Fund Act, 2016. The plan worth Rs. 6000 crores will be approved shortly. This will create more jobs.
1. Rs. 30,000 crores additional emergency working capital fund for farmers through NABARD: RRBs and Rural cooperative banks are the main source for credit. This will benefit small and marginal farmers. This will be over and above the Rs. 90,000 crores provided by NABARD. This will benefit around 3 crore farmers to meet post-harvest (Rabi) and correct Kharif requirements.
2. Rs. 2 lakh crore concessional credit boost to 2.5 crore farmers through Kisan Credit cards: Special drive to be undertaken to provide concessional credit to farmers through Kisan credit cards. Fishermen and animal husbandry will also be included in the drive. This will enable farmers to gain access to institutional credit at concessional interest rate benefiting 2.5 crore families.