The Finance Minister of India, Smt Nirmala Sitaraman has announced the ‘Aatmanirbhar’ Package 3.0. Addressing a press conference to announce more stimulus measures to boost growth.
According to Finance Minister Nirmala Sitaraman, PMI rose to 58.9 in October 2020 indicating strong recovery of the economy from COVID-19 crisis. The energy consumption growth was higher in October 2020.
This is yet another stimulus package ahead of Diwali. The Union Cabinet approved a Rs 2 lakh crore production-linked incentive (PLI) package to boost demand in the country.
1. Boost for Employment
1. Atmanirbhar Bharat Rozgar Yojana
A new Scheme “Atmanirbhar Bharat Rozgar Yojana” is being launched to incentivise the creation of new employment opportunities during the COVID recovery phase.
Beneficiaries (new employees) under Scheme:-
Any new employee joining employment in EPFO registered establishments on monthly wages less than Rs.15000/-.
EPF members drawing monthly wage of less than Rs.15000/- who made exit from employment during COVID Pandemic from 01.03.2020 to 30.09.2020 and is employed on or after 01.10.2020
2. Atmanirbhar Bharat Rozgar Yojana Eligibility criteria for Establishments
1. Establishments registered with EPFO if they add new employees compared to reference base of employees as in September 2020 as under:
- minimum of two new employees if the reference base is 50 employees or less.
- minimum of five new employees if the reference base is more than 50 employees.
2. Establishments registering with EPFO after the commencement of Scheme to get subsidy for all new employees
3. Scheme to be operational till 30th June 2021
- Atmanirbhar Bharat Rozgar Yojana Subsidy support from Central Govt.
1. Central Govt. to provide subsidy for two years in respect of newly eligible employees engaged on or after 01.10.2020 at the following scale:
- Establishments employing up to 1000 employees: Employee’s contributions (12% of Wages) & Employer’s contributions (12% of wages) totalling 24% of wages
- Establishments employing more than 1000 employees: Only Employee’s EPF contributions (12% of EPF wages)
2. The subsidy support to get credited upfront in Aadhaar seeded EPFO Account (UAN) of eligible new employee
2. Rs. 3 lakh crore existing Emergency Credit Line Guarantee Scheme (ECLGS 1.0)
- Announced as part of the Aatmanirbhar Bharat Abhiyaan.
- The scheme is extended till 31st March 2021.
- Fully guaranteed and collateral-free.
- Additional credit up to 20% of outstanding loans as on 29.2.2020 for entities with outstanding credit up to Rs. 50 crore as on 29.2.2020 and annual turnover up to Rs. 250 crore, which was up to 60 days past due as on 29.2.2020
- Eligible entities – MSME units, business enterprises, individual loans for business purposes and MUDRA borrowers
Scheme update as on 12.11.2020
- Rs. 2.05 lakh crore sanctioned to 61 lakh borrowers
- Rs. 1.52 lakh crore disbursal
2. Launch of ECLGS 2.0: Guaranteed credit for supporting stressed sectors
- To be utilized for 100% guaranteed collateral-free additional credit at capped interest rates to—
- Entities in 26 stressed sectors identified by Kamath Committee plus health care sector
- with credit outstanding of above Rs. 50 crore and up to ₹500 Crore as on 29.2.2020.
- Entities with outstanding up to Rs. 50 crore previously covered under existing Scheme
- No upper ceiling on annual turnover
- Entities to be up to 30 days past due (SMA 0) as on 29.2.2020
- Additional credit up to 20% of outstanding as on 29.02.2020
- The tenor of additional credit under ECLGS 2.0 to be 5 years, including a one-year moratorium on principal repayment
- Scheme available till 31.3.2021
- ECLGS 2.0 to provide much-needed relief to stressed sectors by helping entities sustain employment and meet liabilities. Will also benefit the MSME sector which provides goods and services to eligible entities.
3. Rs 1.46 lakh crore boost for Atmanirbhar Manufacturing Production-linked incentives for 10 Champion Sectors
Government of India has already approved PLI schemes for 3 sectors at a cost of Rs 51,355 crores as below:
• Mobile Manufacturing and specified electronics components at a cost of Rs 40,995 crore.
• Critical Key Starting Materials (KSM), Drug intermediates and Active Pharmaceuticals Ingredients (API) at a cost of Rs. 6,940 crore.
• Manufacturing of Medical Devices at a cost of Rs Rs. 3,420 crore.
• 10 more Champion Sectors (next slide) will now be covered under the Production Linked Incentives Scheme to boost the competitiveness of domestic manufacturing.
• This is expected to give a significant boost to Economic Growth and domestic employment.
4. Rs 18,000 crores additional outlay for PM Awaas Yojana (PMAY) –Urban
• A number of measures have been taken in the past several months for the revival of the Housing and Real Estate Sector. These measures have contributed to the fair recovery in this sector. (SWAMIH- 135 projects approved with an outlay of Rs. 13,200 cr. This will result in the completion of 87,000 stuck houses/Flats)
• However, there is a need for further measures to enable the sector to generate more employment.
• Rs 18,000 crores will be provided over the Budget Estimates for 2020-21 for Prime Minister Awaas Yojana – Urban (PMAY-U) through additional allocation and Extra Budgetary Resources.
• This is over and above Rs 8,000 crores already this year.
• This will help 12 lakh houses to be grounded and 18 lakhs to be completed
• Expected add jobs – 78 lakhs, Steel – 25 LMT, Cement – 131 LMT
5. Support for Construction & Infrastructure – Relaxation of Earnest Money Deposit (EMD) & Performance Security on Government Tenders
• Performance security on contracts to be reduced to 3 % instead of 5 to 10%
• Will be extended to ongoing contracts which are free of disputes
• Will also be extended to Public Sector Enterprises.
• States will be encouraged to adopt the same
• EMD will not be required for tenders and will be replaced by Bid Security Declaration
• Relaxations will be given till 31.12.2021 under General Financial Rules
• Will give relief to contractors by reducing locking up of capital and cost of BG 16
6. Demand booster for Residential Real Estate Income Tax relief for Developers & Home Buyers
• Economic slowdown has led to decline in prices of residential unit
• Presently Section 43CA of IT Act restricts differential between circle rate & agreement value @ 10% – Prices may actually be lower than this.
• Decided to increase the differential from 10% to 20% (under section 43CA) for the period from the date of the announcement to 30th June 2021 for only primary sale of residential units of value up to Rs 2 crores.
• Consequential Relief up to 20% shall also be allowed to buyers of the these units under section 56(2)(x) of IT Act for the said period.
• The necessary amendment to IT Act would be proposed in due course.
• This measure will reduce hardships faced by both home-buyers and developers and help in clearing the unsold inventory.
7. Rs 1.10 lakh crore Platform for Infra Debt Financing – Rs 6000 crores Equity infusion in NIIF Debt Platform
• Actual investments made by 3 NIIF funds in downstream funds, platforms and operating companies is Rs 19,676 cr
• NIIF Strategic Opportunities Fund has set up a Debt Platform comprising an NBFC Infra Debt Fund and an NBFC Infra Finance Company.
• The Platform has a Loan book – Rs 8000 cr & deal pipeline of Rs. 10,000 cr
• NIIF AIFL (AA rating) and IFL (AAA rating) will raise INR 95,000 crores debt from market, including project bonds.
• By 2025, will provide infra project financing of ~INR 110,000 crores
• NIIF has already invested nearly Rs 2000 cr. in equity of the Platform
• Government will invest Rs 6000 cr as equity
• Rest of equity will be raised from private investors.
8. Support for Agriculture Rs 65,000 crores for subsidised Fertilisers
• There is an estimated increase in fertiliser usage of 17.8% over the actual usage in 2019-20 of 571 lakh metric tonnes. The increase is on account of favourable monsoons and the resultant increase in sown area.
• Fertiliser consumption which was 499 lakh MT in 2016-17 is expected to increase to 673 lakh MT in 2020-21.
• Increased supply of fertilisers at subsidised rates will help 140 million farmers.
• Rs 65,000 crores being provided to ensure adequate availability of fertilisers to farmers to enable timely availability of fertilisers in the upcoming crop season.
9. Boost for Rural Employment – Enhanced outlays under PM Garib Kalyan Rozgar Yojana
• Prime Minister Garib Kalyan Rozgar Yojana is also in progress in 116 districts. Rs 37,543 crores spent till date.
• PMGKRY effectively dovetails various schemes including MGNREGA, PMGSY etc.
• MGNREGA was provided with Rs 61,500 crore in Budget for 2020-21.
• Rs.40,000 crore was additionally provided in Atma Nirbhar Bharat 1.0.
• As on date, Rs 73,504 crore has been released under MGNREGA and 251 crore person-days of employment have been generated.
• Further additional outlay of Rs. 10,000 crores will be provided for PM Garib Kalyan Rozgar Yojana in the current financial year.
• This will accelerate the growth of the rural economy.
10. Boost for Project Exports – Rs 3000 crore to EXIM bank for Lines of Credit
• Exim Bank extends Lines of Credit (LOC) on behalf of the Government of India, as assistance to developing countries under IDEAS scheme.
• Promotes Indian export by mandating recipient countries to import 75% value of the LOC
• Supported projects cover Railways, power, transmission, road and transport, auto and auto components, sugar projects etc.
• As on date, 811 export contracts, aggregating USD 10.50 bn are being financed under LoCs.
• Rs. 3,000 crore will be released to EXIM Bank for promotion of project exports through Lines of Credit under IDEAS scheme.
11. Capital and Industrial Stimulus
• Rs. 10,200 crore additional budget outlay will be provided towards Capital and industrial expenditure
• Domestic defence equipment
• Industrial incentives
• Industrial infrastructure
• Green energy
12. R&D grant for COVID Vaccine Development
• Rs. 900 crore provided for Covid Suraksha Mission for Research and Development of Indian Covid Vaccine to Department of Biotechnology