By
Sabatini Chatterjee and Satyaki Paul
The outbreak of second wave of COVID19 has wreaked havoc on the demand and supply side which led to double whammy. Further, the National Statistical Office (NSO) had released the provisional estimates of the National income for the year 2020-21. According to the new release, our Indian Economy has suffered worst form of “Economic Recession” for the first time in the last 40 years since 1979-80 (due to global oil shock caused by Iranian revolution).
To counter such situations, the Union Finance Minister of India Shrimati Nirmala Sitharaman has recently announced number of measures to provide relief to diverse sectors affected by the second wave of COVID19 pandemic. The total size of the new economic package is estimated to be around Rs 6.2 lakh crores. This is in inclusion to the Rs 20 lakh crores support stretched by AatmaNirbhar Bharat package, which was announced in 2020.
The Union Finance Minister has publicized around 17 measures. These measures can be collaborated into 3 broad categories:
(I) Economic relief from Pandemic
Announcement 1: Loan Guarantee Scheme for COVID Affected Sectors: In this scheme, the Government has promised the guarantee on loan repayment taken by various sectors which have been affected by the COVID19 pandemic. The guarantee on loan repayment would be provided by National Credit Guarantee Trustee Company Limited.
Announcement 2: Emergency Credit Line Guarantee Scheme (ECLGS): In May 2020, as part of AatmaNirbhar Bharat 1.0, the Government had announced Emergency Credit Line Guarantee Scheme with the following features. The objectives of the scheme are to mitigate the economic distress faced by MSMEs due to COVID19 by providing them additional funding in the form of a fully guaranteed emergency credit line. The benefits will be induced Banks and NBFCs to extend collateral free loans worth Rs. 3 lacs crores to the MSMEs, business enterprises, individual loans for business purposes and MUDRA debtors.
Announcement 3: Extension of AtmaNirbhar Bharat Rozgar Yojana: The Union Finance Minister has announced the extension of the AtmaNirbhar Bharat Rozgar Yojana (in the formal sector) from 30th June 2021 to 31st March 2022. Under this scheme, the Government would bear the burden of the Employee Provident Fund (EPF) contributions of Employees and Employers employed in the formal sector.
Announcement 4: Strengthening Public Health: It is a new scheme has been announced to focus on short term emergency preparedness with special emphasis on children and paediatric care/paediatric beds. These include increasing availability of ICU beds, oxygen supply at central, district and sub-district level; availability of equipment, medicines; access to tele-consultation; strengthening ambulance services etc.
(II) Impetus for Growth & Employment
Announcement 5: Fighting Malnutrition and Improving Farmers’ Income: Recently, ICAR has developed bio-fortified crop varieties having high nutrients like protein, iron, zinc, vitamin-A. Varieties tolerant to diseases, insects, pests, drought, salinity, and flooding etc. have also been developed. 21 such varieties will be released.
Announcement 6: Export Insurance Cover: The Export Credit Guarantee Corporation (ECGC) of India promotes exports by providing credit insurance services. It supports around 30% of India’s merchandise exports. It has been decided to infuse equity in ECGC over 5 years to boost export insurance cover by Rs. 88,000 crores.
Announcement 7: New streamlined process for PPP Projects and Asset Monetization: In due course, a new policy will be formulated for appraisal and approval of PPP proposals and monetization of core infrastructure assets. The new policy would focus on the speedy clearance of projects and to improve the Ease of Doing Business.
Apart from all these announcements. In the end, Let’s dive deep into variousaspectsof the current package:
- To avertvicious economic cycle: There are four drivers of an economy i.e., consumption expenditure, investment, govt. expenditure and net exports. However, India is a consumption-based economy. Thus, recession has led to lower demand, so less consumption expenditure. The package might deter the exacerbation towards stagnation.
- Lift Consumer Confidence: As per RBI’s Monthly Consumption Expenditure Survey, the consumer confidence in India is on a constant decline. Thus, such package would renew confidence in our economy which in turn will affect our GDP growth.
- Incumbent to formerpackage: The AatmaNirbhar Bharat Package of 2020 was worth Rs 20 lacs crores. Thus, the new package introduced by FM can be considered to be aaddition to the former AatmaNirbhar Bharat Package.
- Augment health care Infrastructure: This package might enhance the current condition of our health sector through various schemes.
- Recovercredit creation:In the last year, RBI had taken numerous measures to increase the liquidity in the economy. However, there is poor market and consumer confidence wherein various stakeholders are also going back.
In conclusion, such top-down approach of reviving the economy has already given a mix-bag result as observed. However, lets be positive and wait for the situation to rise as up, as because all the sectors of our economy are already battered from COVID crisis. The packages might provide a way out to the lower middle class which is the current need of the hour.
The first author works as a Research Assistant at the Cultural Research Institute, Kolkata under Backward Class Welfare Department, Government of West Bengal. And, the co-author works as a Ph.D. Research Scholar at the Department of Anthropology, University of Calcutta.