Finance Minister Nirmala Sitharaman on Thursday announced a third set of measures, worth Rs 2.65 lakh crore, under the government's Atmanirbhar Bharat package aimed at rescuing the economy out of a historic contraction caused by the coronavirus pandemic. Largely focused on creating jobs and boosting the nascent recovery visible in various sectors, the latest measures take the total monetary and fiscal aid in the economy's battle against COVID-19-led slowdown to Rs 29.88 lakh crore, roughly equal to the government's Budget for 2020-21 and 15 per cent of the country's gross domestic product (GDP).
Here are 10 things to know about the Atmanirbhar Bharat 3.0 package:
The economy is seeing a strong rebound taking root, the Finance Minister said in a media briefing while announcing a third round of fiscal stimulus to help stressed sectors withstand the COVID-19 pandemic. “It is just not pent-up demand,” Ms Sitharaman said, pointing to some high-frequency indicators.
Latest measures included additional funding for real estate developers and contractors, fertiliser subsidies, a new employment scheme and additional spending on the rural jobs scheme among other initiatives.
The government unveiled a scheme to incentivise the creation of new jobs in a bid to fuel a rebound. Micro-, small- and medium-sized businesses across 26 sectors will be eligible for a credit-guarantee program, and will get a one-year moratorium on loans and four more years to repay the amount, Ms Sitharaman said.
The Finance Minister earmarked an extra Rs 65,000 crore in fertiliser subsidies for 2020-21, to ensure there is adequate availability of fertilisers to farmers.
She counted a production-linked incentive scheme worth Rs 1.46 lakh crore for the manufacturing sector, approved by the government on Wednesday, as part of 12 support measures unveiled on Thursday.
Economists said the measures will help the economy in the long run. "The government is subtly combining both near- and medium-term reforms to help the economy come out from the lockdown impact... Some of the measures are immediate in nature and address the issue of employment especially in rural areas," CARE Ratings chief economist Madan Sabnavis told NDTV.
Some economists say the actual fiscal cost for the government may be much less. Also, there was no clarity on how much impact the new spending will have on the fiscal deficit. Barclays said it estimates the deficit would rise to 7 per cent of GDP.
The economy is expected to contract close to 10 per cent in the current financial year, which ends in March 2021. But Ms Sitharaman said the RBI had expressed a strong likelihood that the economy might begin to show growth in the October-December quarter.
The Finance Minister said an increase in GST collections, higher energy consumption, a rise in the purchasing managers' index, improved bank credit and a stock market surge all suggested that stimulus measures taken so far had helped.
The economy - which the International Monetary Fund singled out as a global bright spot only a few years ago - is seen shrinking over 10 per cent in the current financial year, which would be its worst annual contraction in four decades. It shrank a record 23.9 per cent in the April-June period.
(With inputs from agencies)Post a comment