Nirmala Sitharaman Highlights: job benefits, easier loans, tourism booster, more economic relief measures

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Updated: June 28, 2021 6:29:06 pm

FM Nirmala Sitharaman Highlights: Union Finance Minister Nirmala Sithraman today announced 8 new economic relief measures. These include job benefits and loan guarantees for covid-affected sectors.

Nirmala sitharamanThe Finance Minister announced 8 economic relief measures today.

FM Nirmala Sitharaman Highlights: Union Finance Minister Nirmala Sithraman today announced 8 economic relief measures to help tide over the economic impact of the covid-19 pandemic. The finance minister announced job benefits, extending the Atmanirbhar Bharat Rozgar Yojana and loan guarantees for covid-affected sectors such as tourism. Further, measures have been announced relating to NERAMC, Digital India, and PMGKY. Finance Minister also announced an extension of the PLI scheme for large electronic manufacturing by one year. The total financial burden of the measures announced will be just below Rs 6.29 lakh crore.

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Highlights

    18:23 (IST)28 Jun 2021
    Much needed support provided

    “There is always more that can be done for the tourism industry but this definitely will provide the much needed support to the tourist guides and travel agencies who have been amongst the worst sufferers. In the near term domestic tourism could become an important contributor to the economy and travel agents and tourist guides are its backbone. They need to be helped back on their feet for the rehabilitation of this sector,” Shivpriya Nanda, Partner, J Sagar Associates.

    18:11 (IST)28 Jun 2021
    Underlying fiscal impact will not exceed Rs 1.5 lakh cr

    "The government expanded a package of measures to support the economy, battered by the pandemic. We calculate additional fiscal spending of the measures announced so far to be INR1.5trn, including previously announced steps, which raises our fiscal deficit forecast to 7.5% of GDP," said Rahul Bajoria, Chief India Economist, Barclays. "We estimate the underlying fiscal impact of the measures announced thus far will not exceed INR1.5trn (0.7% of GDP), though the overall impact is projected at ~INR6.3trn (3.0% of GDP). We had factored in INR998bn prior to today’s announcement, to account for provision for free vaccines, additional food subsidies and higher fertilizer subsidies, all of which had been announced previously. The net fiscal impact of today’s steps is unlikely to exceed INR502bn (0.25% of GDP), accounting for steps taken to infuse equity into insurance companies for exporters," he added.

    18:08 (IST)28 Jun 2021
    No direct stimulus

    “While the measures are welcome and target Covid sensitive sectors , most of the fiscal support is still below the line and in the form of loan guarantees, and not direct stimulus. Overall, Amid various push and pull, there is a likelihood of fiscal slippage to the tune of around 0.5% from the initially budgeted 6.8%. Despite the slippage, the effective fiscal impulse will still be negative in FY22. Given the limited efficacy of monetary easing currently, continued countercyclical fiscal policy support—and avoiding a premature consolidation—remains crucial," said Madhavi Arora, Lead Economist, Emkay Global Financial Services on FM’s Relief measures announcement.

    18:07 (IST)28 Jun 2021
    Limited fiscal impact in the short term

    “The FM has increased the outlay of the emergency credit line guarantee scheme for MSMEs to Rs 4.5 Lakh crores and added new credit guarantee schemes to support MFIs and covid impacted sectors including health. These are welcome relief measures, especially for the small borrowers providing them with a safety net. Also, with the relief being a guarantee instead of an outright cash handout, there is limited impact on the Fiscal in the short term. These measures will help alleviate distress in the short term. However, a fiscal push will be needed to negate the impact of the second wave on economic growth. The FM has announced a new credit guarantee scheme for MFIs to facilitate loans of up to Rs 1.25 lakh per individual. The measure is designed to provide a safety net, especially to small borrowers. However, the coverage at only 25 Lakh individuals will need to increase to generate the desired impact," said Shravan Shetty, MD, Primus Partners.

    18:05 (IST)28 Jun 2021
    ABRY offers unique blend of financial support to eligible establishments

    "The ABRY scheme offers a unique blend of financial support to eligible establishments and employment opportunity to 'new employees' (as defined in the scheme) against the backdrop of COVID-19. Therefore, its extension especially in the context of the second wave and an expected third wave of the pandemic may help eligible establishments to manage their fixed costs in the form of social security contributions. Of course, availing the benefits under the scheme comes with its own set of conditions, such as employing a minimum of 2 ‘new employees’ if the establishment has up to 50 covered employees or at least 5 ‘new employees’ in other cases. Further, going by the extant provisions, the benefit of having the Central Government to contribute towards the employees' provident fund is not available to all covered employees in the establishments meeting the employment generation criterion but is limited to the 'new employees' hired by the establishments," said Anshul Prakash, Partner, Khaitan & Co.

    17:03 (IST)28 Jun 2021
    Atmanirbhar Bharat Rozgar Yojana

    Approved outlay Rs. 22,810 crore for 58.50 lakh estimated beneficiaries. Last date for registration is 30.06.2021.

    Subsidy provided for two years from registration for new employees drawing monthly wages less than Rs. 15000 for:

    • Both Employer’s and Employee’s share of contribution (total 24% of wages) for establishment strength upto 1000 employees.
    • Only Employee’s share (12% of wages) in case of establishment strength of more than 1000.
    17:00 (IST)28 Jun 2021
    Announcements by government are well-timed

    “The onslaught of the second wave and the impact of the lockdown was severe, particularly for the contact-oriented businesses like travel & tourism and small businesses. The travel & tourism sector is crucial to earning foreign currency in the case of international tourism. The announcement by the government is well-timed and in the right direction. MSMEs, MFIs, and small and unorganized sectors are the biggest employment creators. The measures will help boost growth, given the increased pace of vaccination across the country. The announcement for the health infra sectors will help strengthen the fight against the pandemic. The enhanced limit for the credit guarantee scheme will ensure funding for businesses and help the most affected sectors. The economy needs the government's support especially post the lockdown in months of April and May," said Nish Bhatt, Founder & CEO, Millwood Kane International - an Investment consulting firm.

    16:54 (IST)28 Jun 2021
    Adverse impact on travel and tourism sector recognized

    "The adverse impact of the pandemic on the travel and tourism sector has been well recognized, with a special outlay of funds for the tourist guides and other stakeholders which shall boost the sector. Waiving the visa fee for the first 5 lakh tourist is expected to Prompt fresh tourists in India immediately in the autumn-winter season and give a fillip to this sector and related economic activities An important feature of the announcements is that this time detailed study and assessment of ground-level realities has been done for the impacted sectors and suitable measures taken accordingly to plug the gaps wherever necessary, including PPP projects and asset monetisation in Infra," said Jyoti Prakash Gadia, Managing Director, Resurgent India.

    16:36 (IST)28 Jun 2021
    Announcements unlikely to impact market directly

    "Extension of emergency credit schemes by 50% to Rs 4.5 lakh cr with a focus on stressed sectors will be a boom for the straggling MSMEs. The subsidy financing by 2% interest rate below the RBI prescribed rate will be again for MFI, NFBCs and small borrowers, which are in dire need of falling NPAs & working capital. The extended & new Atmanirbhar program is positive for the broad economy, especially rural, healthcare & hospitality sector, though unlikely to impact the market directly which will maintain its character," said Vinod Nair, Head of Research at Geojit Financial Services. 

    16:28 (IST)28 Jun 2021
    Measure to attract tourists

    The government has announced 5 lakh free visas for tourists once visa issuance is restarted. Benefit will be available only once per tourist. The scheme will be applicable till 31st March 2022, or till 5 lakh visas are issued, whichever is earlier.

    16:21 (IST)28 Jun 2021
    Rs 6.29 lakh crore worth measures announced

    The finance minister today announced a slew of economic relief measures worth Rs 6.29 lakh crore. These include loan guarantees, an extension of already existing schemes, and a fresh outlay of funds. 

    16:18 (IST)28 Jun 2021
    New streamlined process of PPP projects

    Government comes up with a new PPP policy. The new policy will be formulated for appraisal and approval of PPP proposals and monetization of infrastructure assets, including through InvITs. The aim is to ensure speedy clearance of projects to facilitate the private sector's efficiencies in financing the construction and management of infrastructure. 

    16:15 (IST)28 Jun 2021
    Rs 3.03 lakh crore for reform in power sector

    Reform based result linked power distribution scheme gets Rs 3.03 lakh crore. 25 crore smart meters, 10,000 feeders, 4 lakh km of LT overhead lines planned.

    16:11 (IST)28 Jun 2021
    PLI scheme tenure extension

    Incentives were applicable from August 1, 2020 with the base year of 2019-2020. However, the pandemic disrupted operations for firms. participating companies will get the option of choosing any five years.

    16:10 (IST)28 Jun 2021
    Extension of PLI scheme

    The government has extended the tenure of PLI scheme for large scale electronics manufacturing. Tenure of the scheme launched in 2020-21 will be extended by one year till 2025-26. 

    16:07 (IST)28 Jun 2021
    Rs 19,041 crore for broadband to each village

    Out of 2.5 lakh gram panchayats, 1,56 lakh now have broadband connectivity. The government will provide Rs 19,041 crore for BharatNet for the implementation of the BharatNet PPP model. The total outlay will be Rs 61,109 crore including the already approved amount. 

    16:04 (IST)28 Jun 2021
    Rs 88,000 crore to boost export insurance cover

    Proposed to infuse of Rs 88,000 crore in Export Credit Guarantee Corporation (ECGC) over 5 years to boost insurance cover. Products support around 30% of India's merchandise exports.

    16:02 (IST)28 Jun 2021
    NEIA has supported 211 projects of Rs 52,860 crore

    NEIA has supported 211 projects of Rs 52,860 crore in 52 countries by 63 different Indian project exports till March 31, 2021.

    16:01 (IST)28 Jun 2021
    Rs 33,000 cr boost for project exports

    Proposed to provide additional corpus to National Export Insurance Account (NEIA) over 5 years to allow it to underwrite additional Rs 33,000 crore of project exports. 

    15:58 (IST)28 Jun 2021
    Government looks to aid farmers from North-East

    The NERAMC will get Rs 77.45 crore for restructuring from the government. The NERAMC has 75 farmer producer organisations have registered 13 GI crops from the North East region

    15:57 (IST)28 Jun 2021
    Revival of NERAMC

    The government plans to revive North Eastern Regional Agricultural Marketing Corporation (NERAMC). The institutional will be provided Rs 77.45 crore for financial restructuring and infusion of funds. 

    15:54 (IST)28 Jun 2021
    Fighting malnutrition and improving farmers' income

    ICAR has developed bio-fortified crop varieties having high nutrients like protein, iron, zinc, vitamin-A. 21 such varieties of rice, peas, millet, maize, soybean, buckwheat, winged bean will be dedicated to the nation, said Finance Minister. 

    15:51 (IST)28 Jun 2021
    Tourism sector boost

    Financial support to more than 11,000 registered tourist guides/travel and tourism stakeholders. Working capital/personal loans will be provided with a 100% guarantee to people in tourism sector. No processing charges, waiver of prepayment charges. 

    15:49 (IST)28 Jun 2021
    Previous efforts for healthcare sectors

    The government had last year provided Rs 15,000 crore funds through emergency health systems project, leading to 25 fold increase in covid dedicated hospitals. 

    15:47 (IST)28 Jun 2021
    More funds for healthcare sector, focus on children

    The government announced Rs 23,220 crore additional amount to be spent on this financial year to increase ICU beds, oxygen supply at central and district levels. The new scheme focused on short term emergency preparedness with special emphasis on children and pediatric care /paediatric beds.

    15:44 (IST)28 Jun 2021
    PM Garib Kalyan Ann Yojna

    PMGKAY has been extended by the government till November 2021. In the previous fiscal year the scheme cost the government Rs 1.33 lakh crore, this year it will cost the government Rs 93,869 crore. 

    15:41 (IST)28 Jun 2021
    Record procurement of wheat

    Record procurement of 432.48 lakh crore MT of wheat in rabi marketing season so far against 389.92 lakh MT done in the previous financial year. 

    15:40 (IST)28 Jun 2021
    Additional subsidy for DAP and P&K fertilizers

    An additional amount of Rs 14,775 crore to be provided for DAP and P&K fertilizers. The said amount will include Rs 9,125 crore additional subsidy for DAP and Rs 5,650 crore additional subsidy for NPK based complex fertilisers. 

    15:38 (IST)28 Jun 2021
    Atmanirbhar Bharat Rozgar Yojna

    Benefits worth Rs 902 crore provided under the scheme, benefitting more than 21.42 lakh beneficiaries. 

    15:36 (IST)28 Jun 2021
    Extension of Atmanirbhar Bharat Rozgar Yojna

    The finance minister announced the extension of Atmanirbhar Bharat Rozgar Yojna till March 31, 2022. 

    15:32 (IST)28 Jun 2021
    Loans will be provided with 100% guarantee

    Loans will be provided with 100% guarantee, up to following limits; Rs 10 lakh for TTS, Rs 1 lakh for tourist guides licensed at regional or state level

    15:32 (IST)28 Jun 2021
    Free tourist visas to be issued

    The first 5 lakh tourist visas to India will be free of cost, costing the government Rs 100 crore. 

    15:31 (IST)28 Jun 2021
    Scheme will cover 10,700 regional level tourist guides: FM

    The scheme will cover 10,700 regional level tourist guides recognised by Ministry of Tourism and tourist guides recognised by state govt

    15:30 (IST)28 Jun 2021
    Personal loans to be provided to toursim sector to discharge liabilities and restart biz

    Under new loan Guarantee scheme for COVID affected sectors, working capital/personal loans will be provided to people in toursim sector to discharge liabilities and restart biz impacted due to COVID-19

    15:29 (IST)28 Jun 2021
    Who will be covered?

    10,700 regional level tourist guides to be covered under the scheme. 904 travel and tourism stakeholders will also be covered. 

    15:28 (IST)28 Jun 2021
    Guarantee upto 75 per cent of default amount for upto 3 yrs through NCGTC

    Guarantee upto 75 per cent of default amount for upto 3 yrs through National Credit Gaurantee Trustee Company (NCGTC)

    15:28 (IST)28 Jun 2021
    Reviving tourism

    Finance Minister announced financial support to more than 11,000 registered tourist guides, travel and tourism stakeholders. Tourism stakeholders to get a loan guarantee of up to Rs 10,00,000 and tourist guides to get loan guarantees of up to Rs 1,00,000. 

    15:26 (IST)28 Jun 2021
    Guarantee cover for funding provided by MLIs to MFIs/NBFC-MFIs issued

    Guarantee cover for funding provided by MLIs to MFIs/NBFC-MFIs till March 30, 2022 or till guarantees for an amount of Rs 7,500 cr are issued, whichever is earlier

    15:26 (IST)28 Jun 2021
    Guarantee upto 75% from NCGTC

    Guarantee upto 75% of default amount for up to 3 years through National credit guarantee trust (NCGTC). No guarantee fee to be charged. 

    15:24 (IST)28 Jun 2021
    Credit guarantee scheme to facilitate loans to 25 lakh persons through MFI

    The finance minister announced a credit guarantee scheme to facilitate loans to 25 lakh persons through microfinance institutions. Under this interest rate on loans from banks to be capped at MCLR plus 2%. Maximum loan tenure 3 years. Maximum loans of Rs 1.25 lakh.

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