Finance Minister Nirmala Sitharaman had announced the third edition of the Atma Nirbhar Bharat (3.0). The minister stated that the financial situation tightened by Covid-19 is improving throughout the nation. She claims that prominent economists have noted that the “rebound is not only due to pent-up demand but also due to strong economic growth”. Citing government data, she said that the GST collections have improved. “GST collections for October grossed Rs 1.05 lakh, which is a 15% increase year-over-year. Meanwhile, Foreign Direct Investment (FDI) for April-August was at $35.37 billion, which is a 13% increase year-over-year,” she added.
Sitaraman has added 12 schemes as part of the Atma Nirbhar Bharat 3.0 to stimulate the economy. The schemes include subsidies for farmers, EPFO programme to increase employment, emergency credit line to boost MSMEs and many more. Here are the main schemes:
Atma Nirbhar Bharat Rozgar Yojana
It is planned to incentivise new employment in the country. It applies to any EPFO-registered establishment that will take in new employees or those that lost their jobs during the Covid lockdown. The companies can register with the scheme until June 30, 2021, and the scheme is covered for two years. With a reference base of 50 employees, the company should have employed at least two new members, or employed a minimum of five new workers if the reference base is more than 50. The reference base is calculated from last year. The government will pay the employee contribution (12% of wages) as well as the employer contribution (12% of the wages) to the EPFO if the establishment has 1,000 or fewer workers. The government will only pay the employee contribution if the establishment has 1,000 or more employees.
Emergency Credit Line Guarantee Scheme
The first phase of the scheme has been extended till March 31, 2021. The credit offered is fully guaranteed and collateral-free. The second phase of the scheme will include 26 stressed sectors as identified by the Kamat Committee, including the health sector. The scheme is eligible to MSMEs, Mudra borrowers, and business entrepreneurs. The entities with credit outstanding of Rs 50 crore to Rs 500 crore will be eligible for the scheme. The tenure of additional credit will be five years, including one year of a moratorium on principal payment.
Production Linked Incentives (PLI) for Manufacturing
Nirmala Sitharaman announced Rs 1.46 lakh boost for the manufacturing production, especially for 10 champion sectors. Good support will be given to the automobile and auto component sector, while the others include pharmaceuticals, telecom, food, and more. The purpose of this financial support is to boost domestic manufacturing, employment, and economic growth. Meanwhile, the government had already approved the PLI scheme for three sectors at Rs 51,355 crore.
PM Awaas Yojana (PMAY) – Urban
The Centre has added Rs 18,000 crore outlay over and above the Rs 8,000 crore already issued this year. While this project is estimated to create additional 78 lakh jobs, this should also help ground 12 lakh houses and complete the works on 18 lakh houses.
Equity infusion in National Investment and Infrastructure Fund
The government will infuse Rs 6,000 crore into the NIIF debt platform, while the private players will mark their investment as well. As of now, the NIIF has already invested Rs 2,000 crore, and by 2025, they will provide infra project financing of around Rs 1.10 lakh crore.
Agriculture support worth Rs 65,000 crore
The Minister announced that the Centre would provide Rs 65,000 crore for subsidising fertilisers. The government data estimates that there will be an increase of 17.8% in the use of fertilisers thanks to the favourable monsoon season and the resultant increase in sown area. This should help around 140 million farmers.
Boost for rural employment under PM Garib Kalyan Rozgar Yojana
An additional outlay of Rs 10,000 crore will help stimulate the rural economy and it can be used for MGNREGA and PM Gram Sadak Yojana. The Centre had already spent Rs 37, 543 crore helping the scheme to be in progress in around 116 districts. The MGNREGA has already been provided with Rs 61,500 crore. This has helped generate 251 crore person-days of employment in the informal sector.
Financial boost to EXIM Banks for LOC
The government will provide EXIM (Export-Import) Bank with Rs 3,000 crore for Lines of Credit (LOC). The LOC is a finance mechanism that provides for the export of projects, equipment, goods and service from India. EXIM Bank extends LOC on behalf of the Indian government to help developing countries under the IDEAS (Indian Development and Economic Assistance Scheme) project.
Additional Budget for Capital and Industries
The centre will provide Rs 10,200 crore additional stimulus towards capital and industrial expenditure. The sectors to be covered under this are domestic defence equipment, industrial incentives, industrial infrastructure, and green energy.
Covid R&D support
Rs 900 crore will be moved towards the Covid Suraksha Mission for Research and Development to Department of Biotechnology. This covers only the research aspect, and the actual expenditure on Covid vaccine and its logistics will be a different matter.
Meanwhile, the centre will also provide income tax relief to developers and homebuyers as part of the stimulus. The income tax relief will be provided to 20% of the differential between circle rate and agreement value increased from 10%. This would be applicable on the primary sale of residential units up to Rs 2 crore. Moreover, to ease up business and provide relief to contractors, performance security on contract will be reduced to 3%. The relaxation will be active till December 31, 2021.
The Finance Minister has reiterated that the total stimulus package in all phases of the Atma Nirbhar Bharat and the RBI support comes up to 15% of the country’s GDP. The government support alone is 9% of the GDP, she says, adding that it is a rough estimation. With the projects at hand, the Centre believes that the country should pick up pace as it is slowly going up from the Covid-induced economic downfall.