Ground Report | New Delhi: 8 Big announcement: Union Finance Minister Nirmala Sitharaman Monday announced an Rs. 6.28 lakh crore stimulus package for the Covid-hit economy. She made 8 announcements related to various pandemic-hit sectors such as healthcare, tourism, and agriculture among others.
Out of these 8 economic relief measures, 4 are completely new. This is the first such package after the second wave of Covid heavily bruised the economy. Its emphasis is largely on investments to boost health infrastructure and to extend loan guarantees, concessional credit for Covid-affected sectors.
8 Big announcement
The following were the 8 key takeaways from the package that the Ministry of Finance proposed:
- Loan guarantee scheme: The FM announced Rs. 1.1 lakh crores loan guarantee scheme of which around half (Rs. 50,000 crores) has been reserved for the healthcare sector. A maximum amount of Rs. 100 crores with a guarantee duration of upto 3 years can be availed by private and public hospitals. The scheme guarantees allocation of funds to the effect of 75% coverage for new projects and 60% coverage for expanding existing ones. The interest rate for this is capped at 8.25%. Close to 25 lakh beneficiaries will be able to borrow up to Rs. 1.25 lakhs through micro-financing institutions (MFIs).
- ECLGS allocation: The Emergency Credit Line Guarantee Scheme (ECLGS), introduced May last year, aims to provide banks and certain non-bank lending entities with 100% coverage guarantee to enable them to extend emergency credit to ailing businesses. Under this package, the cap of ECLGS has been raised by 1.5 lakh crores from the earlier 3 lakh crores.
- Expanding healthcare infrastructure: Apart from the credit guarantee, an additional Rs. 23,220 crores have been reserved for expanding medical infrastructure for a year. The aim of these funds is to increase the availability of ICU beds, equipment and liquid medical oxygen. Special emphasis will be laid on child and pediatric care, possibly because children are one of the most likely groups that will be affected by the 3rd wave. (8 Big announcement)
- Measures for tourism sector: The tourism sector took a strong hit with travel bans and restrictions in place. To help this sector, the government has announced that it will provide free visas to the first 5 lakh tourists when international tourism resumes. This is likely to incentivise tourism. However, it’s estimated to cost the government 100 crores. Along with this, the FM also announced that financial support would be provided to more than 11,000 tour guides and other stakeholders in the tourism industry.
- Fun allocation for exports: Rs. 33,000 crores have been allocated for project exports (overseas infrastructure projects) via the National Export Insurance Account (NEIA). Sitharaman also announced additional export insurance coverage worth Rs. 88,000 crores for the trade sector. (8 Big announcement)
- New streamlined process: A new policy will be formulated for the appraisal and approval of PPP proposals and monetization of core infrastructure assets, including through InvITs.
- Credit guarantee scheme: Finance Minister Nirmala Sitharaman announced a credit guarantee scheme to facilitate loans to 25 lakh borrowers under micro finance institutions (MFIs). Guarantee will be provided to scheduled commercial banks for loans to new or existing NBFCs or MFIs for lending upto ₹ 1.25 lakh.