The Finance Minister announced the second tranche of the mega economic package. These measures were to ease the lockdown related hardship faced by migrants, street vendors, small borrowers and small farmers. The idea is to create a safety net for these groups. Package worth ~Rs 3 lakh crore was announced in the second tranche taking the total up to Rs 16.4 lakh crore. For now, Rs 3.6 lakh crore of measure are yet to be announced. The fiscal impact of these measures is estimated in the range of 1.3 to 1.5 per cent. The announcement of lockdown 4.0 will be keenly anticipated next so that businesses have a sense of certainty on path to normalcy.
The FM outlined all the efforts taken to support the urban poor. “One Nation One Ration Card” was introduced to allow beneficiaries to access the public distribution system from any Fair Price Shop in the country. Government estimates that by March 2021 all beneficiaries will have a ration card that will provide access to these shops. In the interim, the government announced a free provision of 5 kgs/person of wheat or rice and 1 kg/family of pulses free of cost for May and June. This is expected to have a fiscal outlay of Rs 3,500 crore. The government also announced affordable rental accommodation for the migrants and the urban poor by converting government funded housing in cities into Affordable Rental Housing Complexes.The government also extended the Credit Linked Subsidy Scheme (CLSS) for affordable housing which ended in March 2020 by a year. It is estimated that this will lead to Rs 70,000 crore of investment in the housing sector.
An Rs 30,000 crore emergency working capital fund is set through NABARD for farmers and concessional credit would be made available to beneficiaries through Kisan credit card. This is expected to reach out to ~2.5 crore farmers providing them with liquidity of Rs 2 lakh crore.
Labour law reforms indicate that the government wants to broaden the minimum wage through national floor wage, provide portability of welfare benefits, health check-up, ESIC coverage pan-India to all establishments employing 10 or more and those with less than 10 being included on a voluntary basisand provision for social security fund for unorganised workers.
The FM also provided the details on the MSMEs automatic loan scheme. This scheme will cover existing borrowers with outstanding credit limit of up to Rs 25 crore as on February 29, 2020 and having a turnover of Rs 100 crore. This would cover loans worth approximately Rs 2.8 lakh crore. The remaining Rs 20,000 crore would be available for subordinate debt for stressed MSMEs.