Nirmala Sitharaman announces Rs 2.65 lakh crore Atmanirbhar Bharat package to incentivise job creation, boost real estate

Finance Minister Nirmala Sitharaman on Thursday announced a Rs 2.65 lakh crore stimulus package to boost the coronavirus hit-economy and ramp up capital expenditure, amid predictions of India entering a recession for the first time in history.

The Aatmanirbhar Bharat 3.0 stimulus package includes a subsidy scheme to give an impetus to job creation and an additional outlay for the urban housing scheme as well as measures aimed at 26 sectors worst hit by the pandemic and lockdown.

The COVID-19 stimulus provided so far added up to 15 percent of the GDP, of which the government contribution was nine percent, The Indian Express quoted Sitharaman as saying.

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Earlier, the government had announced a Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana (PMGKP) in March to protect the poor and vulnerable sections from the impact of the COVID-19 crisis. It was followed by the Aatmanirbhar Bharat Abhiyan package of Rs 20.97 lakh crore in May, largely focussed on supply-side measures and long-term reforms.

Aatmanirbhar Bharat Rozgar Yojana

Sitharaman announced a new job creation scheme, the Aatmanirbhar Bharat Rozgar Yojana,  under which a subsidy will be given to those Employees' Provident Fund Organisation (EPFO) registered establishments that add new employees compared to the reference base of employees as in September 2020.

The condition would be adding a minimum of two new employees for establishments with up to 50 employees. Those establishments with more than 50 employees, would have to give a minimum of five new jobs.

The subsidy would cover retirement fund contributions by employees as well as employers for two years, she said. Employees' contribution (12 percent of wages) and employer's contribution (12 percent of wages) totaling 24 percent of wages would be given to establishments for two years, she said.

The scheme, however, will only cover new employees joining employment in an EPFO-registered establishment on monthly wages less than Rs 15,000.

The scheme would also cover EPFO members drawing monthly wages of less than Rs 15,000, who made an exit from employment during the COVID-19 pandemic from 1 March, 2020 and is employed on or after 1 October, 2020.

The scheme will remain operational till 30 June, 2021.

To accelerate the growth of the rural economy, an additional outlay of Rs 10,000 crore will be provided for PM Garib Kalyan Rozgar Yojana in the current financial year, Sitharaman said.

The finance minister said that Rs 73,504 crore has already been spent from the current outlay of Rs 1 lakh crore on the scheme. The scheme has so far generated 251 crore person-days of employment.

Another measure announced by the finance minister is the Rs 65,000-crore fertiliser subsidy for farmers, which Sitharaman said is to ensure adequate availability of fertilisers to farmers and to enable timely accessibility of fertilisers in the upcoming crop season.

Measures for real estate sector

An additional outlay of Rs 18,000 crore for the urban housing scheme to help complete real estate projects in a bid to create jobs was also announced.

The finance minister said the Rs 18,000 crore would be provided over and above the Budget Estimates for 2020-21 for the Prime Minister Awas Yojana (Urban) (PMAY) through additional allocation and extra-budgetary resources. This is over and above the Rs 8,000 crore already provided this year, she said.

Sitharaman claimed that the move would help start work on 12 lakh houses as well as complete 18 lakh houses. This would create 78 lakh new jobs as well as demand for steel and cement, she claimed.

Announcing support for construction and infrastructure, Sitharaman said Earnest Money Deposit (EMO) and performance security requirements will be relaxed for government tenders.

Performance security on contracts will be reduced to 3 percent instead of 5 to 10 percent. This would be extended to ongoing contracts that are free of disputes. It would also be extended to public sector enterprises, she said, adding that states will also be encouraged to adopt the same.

Earnest money deposit (EMD) will not be required for tenders and will be replaced by a bid security declaration.

These relaxations will be given till 31 December, 2021, she said, adding the move would give relief to contractors by reducing locking up of capital and cost of bank guarantees.

Income Tax rules will also be eased to allow the sale of primary residential units of up to Rs 2 crore value below the circle rate. Only a 10 percent difference between the circle rate and the agreement value was allowed till now.

The differential has now been increased to 20 percent for the period up to 30 June, 2021 for only primary sale of residential units of value up to Rs 2 crore, in order to boost the residential real estate sector.

"This measure will reduce hardships faced by both home-buyers and developers and help in clearing the unsold inventory," Sitharaman said.

Measures for stressed sectors and infrastructure projects

A Rs 6,000-crore equity investment in debt platform of National Infrastructure & Investment Fund (NIIF), which will help NIIF raise Rs 1.1 lakh crore by 2025 for financing infrastructure projects and a Rs 10,200 crore additional budget stimulus for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy were also among the measures announced.

The finance minister also announced a credit guarantee support scheme for the health care sector and 26 sectors stressed due to COVID-19 as well as a  Production Linked Incentive (PLI) worth Rs 1.46 lakh crore for 10 champion sectors. A total amount of nearly 1.5 lakh crore has been earmarked across sectors, for the next five years.

"We are launching credit support for stressed sectors as identified by the Kamath committee. The 26 entities identified in the Kamath committee report along with the health care sector are eligible for this. The tenor of additional credit under this scheme would be five years, which includes a one-year moratorium of principal repayment. There is no upper ceiling on turnover for meeting the eligibility for this scheme," the finance minister said.

The Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs, businesses, MUDRA borrowers, and individuals (loans for business purposes), has been extended till 31 March, 2021.

“The original ECLGS had one year of moratorium and 4 years of repayment while the new scheme will have a one-year moratorium and five years of repayment,” The Indian Express report quoted Sitharaman as saying.

The finance minister added that Rs 2.05 lakh crore had been sanctioned to 61 lakh borrowers and Rs 1.52 lakh crore disbursed so far.

Promotion of project exports

Sitharaman stated that Rs 3,000 crore will be released to the EXIM Bank for the promotion of 'Project Exports' through lines of credits.

EXIM Bank extends lines of credits (LOC) on behalf of the Government of India as assistance to developing countries under Indian Development and Economic Assistance Scheme (IDEAS) Scheme.

Grant for COVID-19 vaccine research

During the press briefing, Sitharam also announced a Rs 900-crore grant to the Department of Biotechnology for COVID-19 vaccine research. She said the grant does not cover the actual cost of vaccine and distribution expenses, which will be made separately as and when the vaccine is available.

Sitharam noted that macro-economic indicators are pointing towards recovery and observed that COVID-19 active cases have declined from over 10 lakh to 4.89 lakh with case fatality rate (CFR) at 1.47 percent.

With inputs from PTI