COVID Measures To Boost Economy

COVID measures to boost Economy

On 28th June 2021, in a press conference, Finance Minister Nirmala Sitharaman announced 8 COVID measures to boost the economy and revive the sectors which were gravely affected by the pandemic. For example, the Hospitality sector and the tourism sector. 

In the previous year, Aatma Nirbhar Bharat packages were set forth. This year’s eight relief measures can be called its extension. 

Measure 1 

A total of Rs. 1.1 lakh crore loan guarantee scheme has been declared for sectors troubled by COVID-19. 

What is a loan guarantee? 

If, due to unavoidable circumstances, someone is unable to repay a loan to the bank, the government will take over the process of repaying. 

To enhance the infrastructure in the health sector, Rs. 50,000 crore loan guarantee has been assigned. This can be used to build more hospitals, increase beds for COVID-affected patients, etc. 

The other sectors are promised Rs. 60,000 crore for now. 

In the health sector, a person or company can take a maximum loan of Rs. 100 crore. The interest rate on the loan cannot exceed 7.95%. 

For the other sectors, the interest rate is capped at 8.25%. 

These values can be changed later according to evolving requirements. 

Measure 2 

The scope of the Emergency Credit Line Guarantee Scheme (ECLGS) has been enlarged. ECLGS is related to the Micro, Small, and Medium Enterprise (MSME) sector. This sector has been widely affected by the pandemic. Large enterprises and businesses usually sustain the blow of a pandemic due to the resources available but the Micro, Small and Medium Enterprises have suffered. 

The scope of ECLGS is now increased to Rs. 4.5 lakh crore. Previously, the provision was Rs. 3 lakh crore. 

Around Rs. 2.6 lakh crore has already been given under the ECLGS scheme according to the previous year’s plan.

Measure 3 

Credit Guarantee Scheme has been launched to give loans to small borrowers or business owners through Micro Finance Institutions (MFIs). 

Individuals can ask for a maximum loan of Rs. 1.25 lakh. The interest rate will be 2% less than the prescribed RBI rate. Under this scheme, the loan duration is 3 years. The focus will be on new loans and stressed borrowers given that Non-Performing Assets (NPAs) should be covered. 

Also, read: RBI’s First Bi Monthly Monetary Policy of 2021-22

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Measure 4 

The measure focuses mainly on reviving Tourism by providing 100% guaranteed loans as it is one of the severely affected sectors during the pandemic. 

It will provide financial support to more than 11,000 registered tourist guides and Travel and Tourism Companies or Stakeholders (TTS). 

TTS can earn around Rs. 10 lakh as a loan. The licensed guides will be provided with around Rs. 1 lakh as a loan. 

Measure 5 

This measure is also related to the tourism sector but focuses on tourists. Measure 4 will not be successful without sufficient tourists. 

According to the scheme, free 5 lakh tourist visas will be provided to foreign visitors. The scheme is available only till 31st March 2022. Every tourist can avail of the benefit only once. 

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Measure 6 

This measure is related to the Aatma Nirbhar Bharat Rozgaar Yojana to promote employment. 

If someone is employed in the formal sector, 12% EPF (Employees’ Provident Fund) is charged over employees’ income if more than Rs. 15,000 and another 12% from the employer. 

Under the Aatma Nirbhar Bharat Rozgaar Yojana scheme, the government will contribute in paying the 24% for EPF. 

According to the measure, the scheme is extended from 30th June 2021 to 31st March 2022. 

More than 21.4 lakh people of around 80,000 companies have availed of this benefit till now.

Measure 7 

Under this measure, farmers will get an additional subsidized protein-based fertilizer of around Rs. 15,000 crore. 

Measure 8 

This measure is related to the Pradhan Mantri Garib Kalyan Anna Yojana. Under the scheme, poor individuals were provided with free food grains. The scheme is again made available from May 2021 to November 2021 after it was discontinued due to unavoidable reasons. 

This will be an extra burden on the government of about Rs. 94,000 crore to make the total cost of Mantri Garib Kalyan Anna Yojana around Rs. 2.28 lakh crore. 

After announcing the 8 measures, the Finance Minister declared the government’s share in Power Discom Reforms to be Rs. 97,631 crore out of the total Rs. 3 lakh crore. The Power Distribution Companies have suffered losses due to the pandemic and the government submerged various schemes like the Integrated Power Development scheme, Saubhagya scheme, and the Deen Dayal Upadhyay Gram Jyoti Yojana scheme in their support. 

This scheme was announced in the budget but the figures were released in the recent press conference. 

In conclusion, as a whole, the government and RBI had announced measures worth Rs. 29,87,641 crore to revive the economy and the new 8 measures will hopefully be supportive.

Read more: Inflation And Impact Of Second-Wave On Economy

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