Economic Relief Package after Covid- Second Wave

• 29 Jun 2021

Why in News

Recently, the Ministry of Finance announced a slew of measures to provide relief to diverse sectors affected by the second wave of Covid-19 pandemic.

• It aims to prepare the health systems for emergency response and provide impetus for growth and employment. However it will increase the Fiscal Deficit by 0.6% as per a report of State Bank of India.
• A total of 17 measures amounting to Rs. 6,28,993 crore were announced in the Economic Relief Package.

Key Points

• Economic Relief from Pandemic:
  
  • Loan Guarantee Scheme for Covid Affected Sectors:
    
    • Additional credit of Rs 1.1 lakh crore will flow to the businesses. This includes Rs 50,000 crore for the health sector and Rs 60,000 crore for other sectors, including tourism.
      
      • The health sector component is aimed at scaling medical infrastructure targeting underserved areas (i.e. non-metropolitan areas).
    • Guarantee Coverage: 50% for expansion & 75% for new projects.
      
      • For aspirational districts, the guarantee cover of 75% will be available for both new projects and expansion.
    • Maximum loan admissible under the scheme is Rs. 100 crore and guarantee duration is up to 3 years.
  • Emergency Credit Line Guarantee Scheme:
    
    • Expand the Emergency Credit Line Guarantee Scheme (ECLGS), launched as part of Atmanirbhar Bharat Package in May, 2020, by Rs 1.5 lakh crore.
  • Credit Guarantee Scheme for Micro Finance Institutions:
    
    • It is a new scheme which aims to benefit the smallest of the borrowers who are served by the network of Micro Finance Institutions (MFIs).
    • Guarantee will be provided to Scheduled Commercial Banks for loans to new or existing Non-Banking Financial Company (NBFC)-MFIs or MFIs for on lending upto Rs 1.25 lakh to approximately 25 lakh small borrowers.
  • Extension of Aatmanirbhar Bharat Rozgar Yojana (ANBRY):
    
    • ANBRY incentivises employers for creation of new employment, restoration of loss of employment through Employees’ Provident Fund Organisation (EPFO).
  • Pradhan Mantri Garib Kalyan Ann Yojana:
    
    • To the beneficiaries under the National Food Security Act (NFSA), 2013, 5 kg of food grains per month free will be provided during May-November 2021.
• Strengthening Public Health:
  
  • New Scheme for Children and Paediatric Care:
    
    • A new scheme for strengthening public health infrastructure and human resources with outlay of Rs. 23,220 crore was also announced.
    • It will focus on short term emergency preparedness with special emphasis on children and paediatric care/paediatric beds.
• Growth & Employment:
  
  • Free one month tourist visa to 5 lakh tourists.
  • Additional Subsidy for DAP & P&K fertilizers.
  • Climate Resilient Special Traits Varieties:
    
    • Indian Council of Agricultural Research (ICAR) has developed biofortified crop varieties having high nutrients like protein, iron, zinc, vitamin-A.
    • These varieties are tolerant to diseases, insects, pests, drought, salinity, and flooding, early maturing and amenable to mechanical harvesting also developed.
    • 21 such varieties of rice, peas, millet, maize, soyabean, quinoa, buckwheat, winged bean, pigeon pea & sorghum will be dedicated to the nation.
  • Revival of North Eastern Regional Agricultural Marketing Corporation :
    
    • A revival package of Rs 77.45 crore will be provided to North Eastern Regional Agricultural Marketing Corporation (NERAMAC).
    • NERAMAC has facilitated registration of 13 Geographical Indicator (GI) crops of North-East.
    • It has prepared a plan to give 10-15% higher price to farmers by-passing middlemen/agents.
    • It also proposes to set up North-Eastern Centre for Organic Cultivation, facilitating equity finance to entrepreneurs.
  • Boost for Project Exports:
    
    • It has been decided to provide an additional corpus to the National Export Insurance Account (NEIA) over 5 years. This will enable it to underwrite additional Rs. 33,000 crore of project exports.
      
      • NEIA Trust promotes Medium and Long Term (MLT) project exports by extending risk covers.
      • It provides cover to buyer’s credit, given by EXIM (Export-Import) Bank, to less credit-worthy borrowers and supporting project exporters.
  • Boost to Export Insurance Cover:
    
    • It has been decided to infuse equity in Export Credit Guarantee Corporation (ECGC) over 5 years to boost export insurance cover by Rs. 88,000 crore.
  • Digital India:
    
    • Additional Rs. 19,041 crore will be provided to implement Bharat Net in PPP model in 16 States on viability gap funding basis.
    • This will enable expansion and upgradation of Bharat Net to cover all Gram Panchayats and inhabited villages.
  • Extension of PLI Scheme:
    
    • Tenure of Production-Linked Incentive (PLI) scheme for Large Scale Electronics Manufacturing has been decided to be extended by one year i.e. till 2025-26.
  • Reform-Based Result-Linked Power Distribution Scheme:
    
    • Revamped Reforms-Based, Result-Linked power distribution scheme of financial assistance to DISCOMS for infrastructure creation, up-gradation of system, capacity building and process improvement was announced in the Union Budget of 2021-22.
      
      • It aims at state specific intervention and to provide assistance for installation of 25 crore smart meters, 10,000 feeders, 4 lakh km of LT overhead lines.
    • The amount available under the scheme is in addition to the allowed additional borrowing of 0.5% of Gross Domestic Product of State which will be available to the States annually for the next four years subject to carrying out specific power sector reforms.
    • Ongoing works of Integrated Power Development Scheme (IPDS), Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and SAUBHAGYA will also be merged in the scheme.
  • New streamlined process for PPP Projects and Asset Monetization:
    
    • A new policy will be formulated for appraisal and approval of Public-Private Partnerships (PPP) proposals and monetization of core infrastructure assets, including through Infrastructure Investment Trusts (InvITs).
    • The policy will aim to ensure speedy clearance of projects to facilitate private sector’s efficiencies in financing construction and management of infrastructure.

Significance of the Package

• It would usher in much-needed liquidity and help revive the employment-intensive sectors such as tourism.
• It will help save livelihoods and mitigate further closures and also create new job opportunities.
• It will bolster efforts for any such healthcare challenges in the future.
• It will enable the Covid-affected Sectors to rise from the challenges they had faced over the past year and a half.
• The liquidity for small businesses could indirectly revive the fortunes of larger industries they source from and help repair broken supply chains.

Source: PIB