Nov 13,2020: Finance Minister Nirmala Sitharaman on Thursday announced a fresh set of relief and stimulus measures for the economy worth ₹1.19 lakh crore, including a scheme to boost re-employment chances of formal sector employees who lost their jobs amidst the COVID-19 pandemic.
The measures, announced a day after the Reserve Bank of India (RBI) said the country had entered into a technical recession in the first half of 2020-21, include a ₹65,000 crore additional outlay for providing fertiliser subsidies to farmers.
Ms. Sitharaman asserted that the economy’s rebound as per recent indicators is not just driven by pent-up demand but reflects strong economic growth.
“The RBI’s latest monthly report predicts a strong return to proper growth for the economy, and there could be strong growth in the third quarter itself that could bring us to positive terrain. The expectation earlier was that growth would be seen in fourth quarter, but the RBI feels it could happen as early as Q3,” the Minister said, adding that even ratings agency Moody’s Investor Service had revised its GDP projections for India upwards.
“Even these assessments by agencies indicate that a correction is happening in the positive direction,” she said, before unveiling 12 measures that she said may be referred to as Atma Nirbhar Bharat Abhiyan 3.0.
The measures included the production-linked incentive scheme for 10 sectors with proposed expenditure of ₹1.46 lakh crore over five years, announced on Wednesday. The other measures add up to a proposed outgo of ₹1,19,100 crore. Experts pegged the fiscal cost of Thursday’s announcement at about 1.2% of GDP, if the PLI scheme was included.
However, the Minister said, “If you take all the packages announced so far, and the RBI measures announced so far, a total of ₹29,87,641 crore has been given so far as stimulus. A total of 15% of GDP. Just the Central government on its own has provided 9% of GDP as stimulus.”
Ms. Sitharaman allocated ₹900 crore for research and development towards the COVID-19 vaccine and said the government was ready to provide for the actual cost of the vaccine and the logistics for its distribution. “Whatever is required for that (the vaccine cost and distribution logistics), as and when it is required, will be provided,” she said.
The measures included the production-linked incentive scheme for 10 sectors with proposed expenditure of ₹1.46 lakh crore over five years, announced on Wednesday. The other measures add up to a proposed outgo of ₹1,19,100 crore. Experts pegged the fiscal cost of Thursday’s announcement at about 1.2% of GDP, if the PLI scheme was included.
However, the Minister said, “If you take all the packages announced so far, and the RBI measures announced so far, a total of ₹29,87,641 crore has been given so far as stimulus. A total of 15% of GDP. Just the Central government on its own has provided 9% of GDP as stimulus.”
Ms. Sitharaman allocated ₹900 crore for research and development towards the COVID-19 vaccine and said the government was ready to provide for the actual cost of the vaccine and the logistics for its distribution. “Whatever is required for that (the vaccine cost and distribution logistics), as and when it is required, will be provided,” she said.
To spur rural employment, an additional ₹10,000 crore has been provided for spending through the MGNREGS and PM’s rural roads scheme. Effectively, this takes the total allocations for MGNREGA in the year close to ₹1.1 lakh crore, with Ms. Sitharaman stating that ₹73,504 crore had already been spent to generate 251 crore person days of employment.
