Centre’s fiscal expenditure will be Rs 1.50 lakh crore of the Rs 20.97 lakh crore package, as per Barclays Research. CARE Ratings pegs Centre’s outgo at Rs 2.8 lakh crore, while Ernst & Young estimates the same at Rs 3.08 lakh crore. SBI Research has calculated Rs 2.03 lakh crore capital outgo for the centre.
Finance Minister Nirmala Sitharaman unveiled the package details in five tranches during the week. Prime Minister Narendra Modi had earlier said the package would be 10 per cent of the GDP. Let’s take a look at all the announcements made by the Centre to soften the impact of coronavirus pandemic on Indian economy.
Here is the detailed breakup of India’s Atma Nirbhar economic package:
RBI MONETARY POLICY ACTIONS
The RBI on April 14 had announced monetary policy actions worth Rs 8.01 lakh crore, thereby injecting additional liquidity into the system. Key announcements included CRR reduction to 3 per cent from 4 per cent, ensuring additional liquidity worth 1.37 lakh crore. The apex bank announced targeted long-term repos operation (TLTRO) twice to increase liquidity in the markets. Marginal standing facility (MSF) was decreased to 2 per cent from 3 per cent, allowing banks to avail an additional Rs 1.37 lakh crore worth liquidity under the LAF window. The central bank also announced special refinance facility worth 50,000 crore to NABARD, SIDBI and NHB.
As Franklin Templeton closed six schemes due to redemption pressure, the RBI stepped in and offered Rs 50,000 crore special liquidity facility (SLF-MF) to the MF industry to maintain liquidity.
The RBI through purchase of government security in open market injected liquidity worth Rs 90,000 crore and provided additional liquidity worth Rs 1.25 lakh crore through long-term repo operations (LTRO).
The Centre announced the Garib Kalyan Package worth Rs 1.7 lakh crore on March 26, a day after the first phase of lockdown was announced in India. The package comprised measures taken for poor, elderly, women and migrants. The government offered free rice/wheat and pulses; free cooking gas for three months; hike in MNREGS wages to Rs 202 a day from Rs 182; direct money transfer to elderly, poor widows and disabled; and direct money transfer to women Jan Dhan account holders. The Centre also announced PM Kisan payment; assistance to construction workers; and measures to prevent job disruption by paying 24 per cent of monthly wages of employees earning less than Rs 15,000 directly into their PF accounts for three months.Through the Central Board of Indirect Taxes and Customs (CBIC), money stuck in pending tax refund claims was also released, increasing cash in hand for many.
The Centre also initiated refund and drawback disposal drive, under which Rs 7,800 crore worth revenue lost due to tax concessions since March 22 was given, thereby increasing liquidity and buying power.
The Centre also announced emergency health response preparedness package worth 15,000 crore, which will be implemented in three phases between January 2020 and March 2024 to strengthen emergency COVID-19 response.
Further Measures announced in five tranches
The FM announced first tranche of the fiscal package worth Rs 5.94 lakh crore on May 13. The package comprised credit guarantee worth Rs 3 lakh crore for MSMEs; subordinate debt assistance worth Rs 20,000 crore; equity infusion for MSMEs worth Rs 50,000 crore; PMGKP EPF support worth Rs 2,800 crore; reduced EPF contribution worth Rs 6750 crore; liquidity window for NBFC/HFC/MFIs worth Rs 30,000 crore; partial credit guarantee scheme worth Rs 45,000 crore; relief to discoms worth Rs 90,000 crore; and TDS/TCS relief worth Rs 50,000 crore.
In the second tranche, measures worth Rs 3.10 lakh crore were announced for poor migrants and farmers. Under the package, the FM announced Kisan Credit Card (KCC) worth Rs 2 lakh crore; emergency working capital for farmers worth Rs 30,000 crore; Mudra Shishu loans – interest subvention worth Rs 1,500 crore; special credit facility worth Rs 5,000 crore for street vendors; free food for migrant workers worth Rs 3,500 crore; and housing credit subsidy worth Rs 70,000 crore for middle-income people.
The third tranche worth Rs 1.5 lakh crore comprised agri infrastructure fund worth Rs 1 lakh crore; formalisation of micro food enterprises (Rs 10,000 crore); Rs 20,000 crore under the Pradhan Mantri Matsya Sampada Yojna (PMMSY); animal husbandry infrastructure development fund worth Rs 15,000 crore; Rs 4,000 crore for herbal cultivation; Rs 500 for beekeeping initiatives; and Rs 500 crore under operation green to fruits and vegetable owners.
The fourth fiscal package consisted of measures for opening up key sectors along with viability gap funding of Rs 8,100 crore. The Centre opened FDI limit from 49% to 74% under automatic route in defence manufacturing; introduced commercial mining in the coal sector; reduced restriction on the use of Indian air space to increase the efficiency of passenger aircraft; allowed private businesses in the field of satellites and other space-based services; and permitted ISRO to partner with private companies. The government also gave nod to setting up of nuclear reactors via PPP mode for the production of medical isotopes; paved way for privatisation of discoms in UTs; and approved social infrastructure worth Rs 8,100 crore.
The final package announced today comprised measures worth Rs 40,000 crore, in which additional funding worth Rs 40,000 crore was provided under the MGNREGS; increased public health expenditure to make India future pandemic ready; and launched PM eVIDYA for online access to education.
The Centre also allowed decriminalisation of Companies Act involving minor technical and procedural defaults; raised minimum threshold for initiating insolvency proceedings to Rs 1 crore from Rs 1 lakh earlier; announced a new coherent policy allowing private players’ entry into strategic sectors; and increased borrowing limits of states from 3% to 5% for 2020-21.