New Delhi: Union Finance Minister Nirmala Sitharaman Thursday announced a slew of measures for migrant labourers, farmers, self-employed and small traders as part of the Modi government’s Rs 20 lakh crore economic package meant to ease the impact of the Covid lockdown.
On Wednesday, the finance minister had announced many steps aimed at improving access to funds for micro, small and medium enterprises (MSMEs) and non-banking finance companies (NBFCs) under the same package.
More announcements will follow, Sitharaman said at a press conference Thursday, adding that the government will announce further steps for farmers in the coming days.
“We are committed to improving the lot of workers and ensuring that migrant workers get the benefits due to them,” she added.
Like with the previous tranche, the direct fiscal impact of these announcements will be negligible and the idea is to improve credit flow to different segments.
Migrant workers have been among the worst affected by the lockdown, with photographs of stranded labourers walking hundreds of kilometres home emerging as one of the defining images of India’s fight against Covid-19.
The government will provide free foodgrains to an estimated 8 crore migrant workers even without ration cards, at a cost of Rs 3,500 crore, Sitharaman said. The migrants will be entitled to either 5 kg of wheat or 5 kg of rice per individual and one kg of chana per family, per month, for the next two months.
In addition, the government also announced that complete nationwide portability of ration cards will be a reality by March 2021, which will enable migrant workers to avail of the public distribution system (PDS) facility irrespective of their place of residence.
Around 83 per cent of the national portability will happen by August 2020, according to the minister’s presentation. The government had initially planned to complete the project by June 2020.
The government will also shortly launch an affordable rental housing scheme for migrant labourers under the Pradhan Mantri Awas Yojana.
Sitharaman said the central government is also trying to encourage greater enrolment under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to facilitate employment for migrant labourers returning to their home states. May 2020, she added, had seen an additional enrolment of 40-50 per cent over the year-ago period.
For self-employed and street vendors
For the small self-employed, another section that has been hit hard by the lockdown, the government announced a partial interest relief of 2 per cent for Mudra loans of up to Rs 50,000.
Nearly Rs 1.62 lakh crore of loans are outstanding under the ‘Shishu’ segment of these loans, which caters to new business enterprises in this sector. The move will benefit around 3 crore self-employed workers by reducing their interest outgo.
Sitharaman also announced steps to ease credit access for 50 lakh street vendors. She said a Rs 5,000 crore special credit facility provision will be made by the government to provide an initial working capital of up to Rs 10,000 for these vendors.
Digital payments will be incentivised and working capital may be enhanced as their credit history is built.
Among the initiatives introduced for farmers is a Rs 30,000 crore emergency working capital fund, to be introduced through the National Bank for Agriculture and rural development (NABARD), for 3 crore small and marginal farmers. The fund will be over and above the Rs 90,000 crore refinance provided by NABARD for 2020-21.
This additional emergency working capital is meant to address the post-harvest requirements of the Rabi season and the ongoing Kharif season, Sitharaman said.
Additionally, the government also announced concessional credit of Rs 2 lakh crore for 2.5 crore farmers through Kisan Credit Cards (KCC). The credit will also be made available to fishermen and animal husbandry farmers.
For the middle class
The government has extended by a year, until next March, the credit-linked subsidy scheme in the housing sector for those earning an annual income of Rs 6-18 lakh.
The scheme allows home-buyers to get loans at a concessional interest rate
The move will benefit 2.5 lakh middle-income families and lead to investments of Rs 70,000 crore in housing, Sitharaman said.
The Modi government and the Reserve Bank of India have together announced measures adding up to Rs 13 lakh crore if one includes the Rs 5.2 crore liquidity infusion measures announced by the RBI, the fiscal package of Rs 1.7 lakh crore announced in March, and the Rs 6 lakh crore worth of measures Sitharaman revealed Wednesday.
Rahul Bajoria, the chief India economist at Barclays, said in a note that the measures announced Thursday provided around Rs 2.46 lakh crore of monetary support, adding that it leaves around Rs 4.25 lakh crore of the Rs 20 lakh crore package that is yet to be announced.
The actual fiscal impact of the latest steps will only be Rs 11,100 crore in 2020-21, which brings the total cost of additional incentives announced over these two days to Rs 66,500 crore or 0.34 per cent of GDP, he estimated.
This report has been updated with additional information