FM Sitharaman announces new stimulus measures for India\'s COVID-stricken economy

While expressing confidence that the Indian economy is on its way to emerge strongly after a long and strict COVID-19-induced lockdown, Finance Minister Nirmala Sitharaman on Thursday announced more stimulus measures to boost growth.

A new job creation scheme, extension to ECLGS scheme, monetary grant to COVID-19 vaccine research, additional funding for urban housing and increased subsidies for fertilisers were some of the announcements made by Sitharaman.

As per a new job creation scheme establishments that make new hires will get subsidies. The subsidy would be to cover for retirement fund contributions by employees as well as employers for two years, she said.

Employees contribution (12 per cent of wages) and employer's contribution (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said.

Under the Aatmanirbhar Bharat Rozgar Yojana, every Employees' Provident Fund Organisation (EPFO)-registered establishment taking new employees would get this subsidy.

The scheme will cover any new employee joining employment in EPFO-registered establishment on monthly wages less than Rs 15,000.

It would also cover EPF members drawing monthly wages of less than Rs 15,000, who made an exit from employment during COVID-19 pandemic from March 1, 2020 and is employed on or after October 1, 2020.

The scheme would cover establishments registered with EPFO if they add new employees compared to the reference base of employees as in September 2020.

The condition would be adding a minimum of two new employees for establishments with up to 50 employees. Those establishments with more than 50 employees, would have to give a minimum of five new jobs. The scheme would be operational till June 30, 2021.

Extension to ECLGS scheme

The Finance Minister also announced an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 31, 2021. Under the scheme, fully guaranteed and collateral-free loans are provided to small and micro enterprises.

Sitharaman also announced a guaranteed credit scheme for supporting stressed sectors. The scheme would cover entities in 26 stressed sectors identified by the Kamath Committee plus healthcare sector with credit outstanding of above Rs 50 crore and up to Rs 50 crore as on February 29, 2020.

Additional credit of up to 20 per cent of outstanding as on February 29, 2020, would be given to entities in these sectors, she said.

Tenor of additional credit would be five years, including one year of moratorium on principal repayment. Scheme would be available till March 31, 2021.

Fight against COVID-19

Sitharman announced a Rs 900 crore grant to the Department of Biotechnology for COVID-19 vaccine research.

She said the grant does not cover the actual cost of vaccine and distribution expenses, which will be made separately as and when the vaccine is available.

She also said that Rs 10,200 crore additional budget outlay will be provided towards capital and industrial expenditure for domestic defence equipment, industrial incentives and infrastructure and green energy.

Fertilizer subsidy

Sitharaman announced a Rs 65,000-crore fertilizer subsidy for farmers as part of her stimulus package to boost the economy. She said that the subsidy will ensure adequate availability of fertilisers to farmers and to enable timely accessibility of fertilisers in the upcoming crop season.

She said an additional outlay of Rs 10,000 crore will be provided for PM Garib Kalyan Rozgar Yojana in the current financial year.

Boost to housing sector

A Rs 18,000 crore additional outlay for the urban housing scheme will help complete real estate projects that would create jobs and boost the economy, she said.

She said the Rs 18,000 crore would be provided over and above the Budget Estimates for 2020-21 for the Prime Minister Awas Yojana (Urban) through additional allocation and extra budgetary resources. This is over and above Rs 8,000 crore already provided this year.

She said the move would help start work on 12 lakh houses as well as complete 18 lakh houses. This would create 78 lakh new jobs as well as demand for steel and cement.

She also announced relaxations in income tax rules to allow sale of primary residential units of up to Rs 2 crore value below the circle rate.

Till now, only 10 per cent difference between the circle rate and the agreement value was allowed.

To boost residential real estate sector, she said the differential has now been increased to 20 per cent for period up to June 30, 2021 for only primary sale of residential units of value up to Rs 2 crore.