The government of India announced a economic relief package to provide a safety net for those facing financial distress amid the COVID-19 spread and the lockdown. Nirmala Sitharaman announced an Economic relief package of Rs 1.7 lakh crore for the poor.
The relief package would benefit around 800 million Indians by providing free grains, cooking gas along with cash through direct transfer. Further, Nirmala Sitharaman stated that the announcements are aimed at providing relief to the most vulnerable section and more measures could be announced if needed.
Food for Poor
For ensuring adequate food supply, the government will provide an additional 5 kg of wheat/rice (apart from which they were already getting) under Prime Minister Garib Kalyan Yojana. Also, households will be given one kg of pulses of one’s choice under the same for the next three months.
In addition, the government has declared health insurance worth Rs 50 lakh per person for the 22 lakh medical personnel health workers in government hospitals fighting the virus at personal risk, including doctors, nurses, sanitation, ASHA or government workers.
Relief to Farmers and Workers
Around 8.69 crore farmers getting Rs 6000 (Rs 2000 x 3) under PM-Kisan Samman Nidhi Scheme, will get the first installment in advance in the first week of April. Also, the wage rate under MGNREGA will be increased from Rs 182 to Rs 202. This will benefit around 5 crore families by providing an additional income of Rs 2000 per worker per month.
Economic Relief Package- For the Needy
The government decided to provide Rs 1000 (in addition to pension) to poor senior citizens, widows and ‘divyangs’ in two phases over the next three months. Also, Rs 500 per month will be deposited in accounts of 20 crore women under Jan Dhan Yojana. Further, around 8.3 crore families covered under the Ujjwala scheme will get free cooking-gas cylinders for the next 3 months. Besides, the collateral-free loan limit for women Self-Help Groups have been increased from Rs 10 lakh to Rs 20 lakh.
The government will bear the cost of employee provident fund (24%) for establishments having less than 100 employees (90% of who earn less than Rs 15,000 per month). Thus, this will benefit around 80 lakh employees. Further, the government has permitted the withdrawal of non-refundable advance or three months of wages from the EPF account, whichever is less. Subsequently, the move is likely to benefit around 4.8 crore organized sector workers.
Measures for Construction Workers
The Centre has directed the government of all states to use the Building and Construction Workers Welfare Fund of Rs 31,000 crore to provide relief to construction workers. Also, it has allowed the state governments to use the District Mineral fund for providing health-related services.
While announcing the measures, FM said that the government has responded immediately within 36 hours of the lockdown. Further, she added that the package will be rolled out immediately. When asked about the economic pain of the companies due to lockdown, she said they will gradually address all.
Well Defined Relief Package
Industry experts appreciated the government’s effort as financial markets responded positively after the measures taken. Further, State Bank of India chairman Rajnish Kumar said that it is a well-defined package as no one should be deprived of basic facilities. Besides, ITC chairman Sanjiv Puri said that such measures will go a long way in providing benefits to farmers, daily wage earners and self- help groups in such an unprecedented situation.
Confederation of Indian Industry director general Chandrajit Banerjee mentioned the need for relief measures for distressed businesses. He hoped that RBI will soon come up with measures such as a moratorium on debt repayments and redefinition of non-performing assets to aid businesses. Further, he stated that the government must spend liberally to provide a stimulus to the economy if the situation continues for the next three months. The tourism, hospitality, automobiles, aviation, and MSMEs are facing challenges due to the disruption s created by coronavirus lockdown.
In all, after relaxing the timelines for tax filings, the government has announced a comprehensive economic relief package to deal with the effects of coronavirus.