Union Finance Minister Nirmala Sitharaman announced on Thursday the 12th November, 2020 new stimulus measures worth Rs 2.65 lakh crore, under Atmanirbhar Bharat Abhiyaan 3.0 to boost the Indian economy amid the ongoing COVID-19 pandemic.
The new stimulus package reinforces the ‘fiscal conservatism’ ideology of the government — rather than large cash transfers, the growth philosophy centres around creating an ecosystem that aids domestic demand, incentivises companies to generate jobs and boost production. (She also informed that the total stimulus announced by the Government and Reserve Bank of India till date, to help the nation tide over the COVID-19 pandemic, works out to ₹ 29.87 lakh crore, which is 15% of national GDP. Out of this, stimulus worth 9% of GDP has been provided by the government.)
Atma Nirbhar Bharat:
- Atmanirbhar Bharat, which translates to ‘self-reliant India’ or ‘self-sufficient India’, is the vision of our PM of making India a bigger and more important part of the global economy.
- It doesn’t mean “self-containment”, “isolating away from the world” or being “protectionist”.
- It calls for pursuing policies that are efficient, competitive and resilient, and being self-sustaining and self-generating.
- The five pillars of ‘Atmanirbhar Bharat’ are stated as economy, infrastructure, technology-driven systems, vibrant demography and demand.
Here are 7 key takeaways from Atmanirbhar Bharat Abhiyaan 3.0 economic stimulus package:
Atmanirbhar Bharta Rozgar Yojana: Ms Sitharaman announced the new Aatmanirbhar Bharat Rozgar Yojana which will incentivise the creation of new jobs. The new employees hired by the EPFO-registered organisations will receive benefits during COVID-19. If the EPFO registered establishments take in new employees or those who lost jobs earlier will get benefits from government.
Emergency Credit Line Guarantee Scheme: The emergency credit line guarantee scheme (ECLGS) for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021. A credit guarantee support scheme for health care sector and 26 sectors stressed due to COVID-19 pandemic was also launched. The entities of the 26 stressed sectors are identified by Kamath Committee.
Production-Linked Incentive: The PLI scheme worth ₹ 1.46 lakh crore is being offered to 10 champion sectors which will help boost the efficiency and competitiveness of domestic manufacturing. A total amount of ₹ 1.5 lakh crore has been earmarked across sectors, for the next five years.
Pradhan Mantri Awaaz Yojana Urban: An additional outlay of ₹ 18,000 crore over budget estimate towards PM Awaaz Yojana Urban has been announced which will help ground 12 lakh houses and complete 18 lakh houses. This will create additional 78 lakh jobs and improve the production and sale of cement and steel.
Relaxation of Earnest Money Deposit (EMD): The performance security on government contracts in the construction/infrastructure sector will be reduced to 3 per cent from 5-10 per cent. EMD will not be required for bid tenders and will be replaced by Bid Security Declaration. The relaxations will be applicable till December 31, 2021.
Income Tax Relief for Developers and Home Buyers: The finance ministry announced tax relief for developers and home buyers for houses up to ₹ 2 crore. The differential between circle rate and agreement value in real estate income tax is being increased from 10 per cent to 20 per cent from today (November 12, 20) till June 30, 2021, for primary sale of residential units up to ₹ 2 crore the income tax relief provides an incentive to the middle class to buy homes, Ms Sitharaman said.
Equity Investment in Debt Platform by NIIF: The government will make ₹ 6,000 crore equity investment in debt platform of National Investment and Infrastructure Fund (NIIF), which will help NIIF raise ₹ 1.1 lakh crore by 2025 for financing infrastructure projects.
FM’s 12 Key announcements as part of Aatma Nirbhar Bharat 3.0
1) Aatma Nirbhar Bharat Rozgar Yojana
A new scheme is being launched to incentivize job creation during COVID-19 recovery. If EPFO-registered establishments take in new employees without EPFO numbers or those who lost jobs earlier, the Yojana will benefit these employees. The scheme will be effective from October 1, 2020.
2) Emergency Credit Line Guarantee Scheme for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021. Credit guarantee support scheme is being launched for Healthcare sector and 26 sectors stressed due to COVID-19. Entities will get additional credit up to 20% of outstanding credit; repayment can be done in five years (1 year moratorium + 4 years repayment).
3) Production Linked Incentive worth ₹ 1.46 Lakh Crore is being offered to 10 champion sectors.
This will help boost competitiveness of domestic manufacturing. Will give a big boost to economy, investment, exports and job creation. A total amount of nearly 1.5 Lakh Crore has been earmarked across sectors, for next five years.
4) ₹ 18,000 Crore Additional outlay for PM Awaas Yojana - Urban
This is over and above Rs. 8000 Crore already allocated this year; will help ground 12 Lakh houses and complete 18 Lakh houses; will create additional 78 Lakh jobs and improve production and sale of steel and cement, resulting in multiplier effect on economy.
5) Support for Construction & Infrastructure – Relaxation of Earnest Deposit Money & Performance Security on Government Tenders
To provide ease of doing business and relief to contractors whose money otherwise remains locked up, performance security on contracts will be reduced to 3%. EMD for tenders will be replaced by bid security self-declaration. The relaxations will be till December 31, 2021.
6) Income Tax relief for Developers & Home Buyers
Differential between circle rate and agreement value in real estate income tax is being increased from 10% to 20%. This is for primary sale of residential units up to ₹ 2 Crore (from date of announcement of this scheme, till June 30 2021). The Income Tax relief provides incentive to middle class to buy homes.
7) Platform for Infra Debt Financing
Govt. will make ₹ 6,000 Crore equity investment in debt platform of National Investment and Infrastructure Fund, which will help NIIF raise ₹ 1.10 Lakh Crore by 2025 for financing infrastructure projects.
As fertilizer consumption is going up significantly, increased supply of fertilizers will ensure that forthcoming crop seasons will not be affected for want of adequate fertilizers.
9) Boost for Rural Employment:
10) Boost for Project Exports
₹ 3,000 Crore boost to be given for project exports through assistance given by India to developing countries under Indian Development and Economic Assistance Scheme (IDEAS Scheme). This will help EXIM Bank facilitate these Line of Credit development assistance activities and promote exports from India.
11) Capital and Industrial Stimulus
₹ 10,200 Crore additional budget stimulus will be provided for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy.
12) R&D grant for COVID Vaccine
₹ 900 Crore is being provided to Department of Biotechnology for research activities related to COVID-19 vaccine development. This does not include cost of vaccine or logistics for vaccine distribution (whatever is required for that will be provided)
Summary of Stimulus Measures Announced till date :
|1.||Pradhan Mantri Garib Kalyan Package (PMGKP) +||1,92,800|
|2.||Atmanirbhar Bharat Abhiyaan 1.0||11,02,650|
|3.||PMGKP Anna Yojana – extension of 5 months from Jul - Nov||82,911|
|4.||Atmanirbhar Bharat Abhiyaan 2.0 (12th October)||73,000|
|5.||Atmanirbhar Bharat Abhiyaan 3.0||2,65,080|
|6.||RBI measures announced till 31st Oct 2020||12,71,200|
Click here, to access the presentation made by the Finance Minister during the Press Conference
Source: pib.gov.in, Indian Express, NDTV, https://www.civilsdaily.com/news/atmanirbhar-bharat-abhiyan-3-0-package/