Economic Stimulus Package 2.0 by FM Nirmala Sitharaman (May 14, 2020)
On May 14, 2020, the second tranche of the Economic Stimulus Package 2.0 by FM Nirmala Sitharaman was announced, with a key Focus on providing liquidity support to the Farmers, Street vendors, Self-employed people and the food relief to the Migrant workers. Finance Minister has also made key announcements regarding Mudra Loanees, Affordable Housing Sector and for Employment generation for tribals.
In the first set of measures, on May 13, 2020, the Finance Minister made 16 key announcements, which focused on benefits for MSMEs, NBFCs, Tax measures and support for the Employee’s Provident Fund (EPF).
Economic Stimulus Package Part 2 by FM Nirmala Sitharaman (May 14, 2020)
- On 12th May 2020, Hon’ble Prime Minister announced a Special economic and comprehensive package of Rs.20 Lakh Cr. This COVID-19 stimulus package is equivalent to 10% of India’s GDP.
- In his addressing, PM gave a inspiring call for Self-Reliant India Movement. He also outlined five pillars of Aatmanirbhar Bharat :
- Vibrant Demography and
- Let us discuss the key stimulus measures announced by FM Nirmala Sitharaman in her May 14, 2020 addressing.
- Total liquidity infusion as per the second stimulus package adds up to Rs.3.16 Lakh Cr, of which only Rs.5,000 Cr will be an outflow from the Government.
- The balance liquidity measures will be undertaken by banks and other financial institutions.
The Breakup of Total Value of the Economic Package
The Breakup of the Atmanirbhar Economic Package 2.0
Key Focus areas of Economic Stimulus Package 2.0 are summarized below :
The specific scheme wise announcements are detailed below:
- Free Food grains Supply to all Migrants for the next 2 Months
- Migrants who are non-ration card holders (neither NFSA nor state card) will be provided 5 kg of wheat or rice per person and 1 kg of chana per family per month for the next 2 months.
- This will benefit 8 Cr migrants.
- The government will spend Rs 3,500 Cr for this in the next 2 months while the responsibility of the implementation, identification and distribution will be with the states.
- National Portability of the Ration Cards – One Nation, One Ration Card
- This scheme will enable migrant beneficiary to access public distribution system from any fair price shop in the country.
- 67 Cr beneficiaries (83% of the PDS population) in 23 states will be covered by August 2020 while the balance will be covered by March 2021.
- Affordable Rental Housing Complex for Migrant Workers
- A scheme under the Pradhan Mantri Aavas Yojana (PMAY) for migrant and urban poor will be launched to provide ease of living at affordable rents.
- This will be done by 3 ways:
- Converting government funded housing in the cities into Affordable Rental Housing Complexes
- Incentivising manufacturing units/ industries to develop affordable rental housing complex on their private land
- Also incentivising state government agencies/ central government organisations for the same
2. Mudra Loans (Only Shishu Loans)
- Interest Subvention Scheme for Mudra – Shishu Loans
- The Government will provide an interest subvention scheme of 2% for prompt payees for a period of 12 months after the 3 month moratorium period (extended by the RBI) is over.
- This will provide a relief of Rs 1,500 Cr to the Mudra- Shishu loanees.
3. Street Vendors
- Special Credit Facility for Street Vendors
- The Government will launch a special within a month to facilitate working capital loan facility of around Rs 5,000 Cr.
- The initial working capital of Rs.10,000 per street vendor will be provided.
- This will benefit around 50 lakh street vendors.
- Extension of Credit Linked Subsidy scheme
- The credit linked subsidy scheme for the middle income group (Rs 6 lakhs – Rs 18 lakhs) is to be extended till March 31, 2021.
- This is likely to benefit 2.5 middle income families during FY21.
- It will lead to an investment of Rs.70,000 Cr in the housing sector.
5. Employee Creation for Tribals
- CAMPA (Compensatory Afforestation Management and Planning Authority) funds to be utilized for employment generation.
- Here, the government will approve plans worth Rs.6,000 Cr which will help the state to utilise funds for various activities like afforestation and plantation work.
- This in turn will help in job creation in urban, semi-urban and rural
- Additional emergency working capital fund of Rs.30,000 Cr for the farmers through the NABARD
- The NABARD will extend additional refinancing support of Rs.30,000 Cr (over the current Rs.90,000 Cr) to the farmers.
- This will benefit around 3 Crore farmers.
- Concessional Credit Boost of Rs.2 Lakh Cr under Kisan Credit Card Scheme
- This will be a special drive to provide concessional credit to PM-KISAN beneficiaries through Kisan Credit Cards.
- Fisherman and Animal Husbandry Farmers will also be included in this drive.
- This will inject additional liquidity of Rs.2 lakh crore in the farm sector. It will benefit 2.5 Crore farmers.