Economic Relief Package 2: Step towards Aatmanirbhar Bharat
In continuation of the steps announced on 13th May 2020 towards Aatmanirbhar Bharat, the Finance Minister announced a further policy and financial decisions today including a well-defined Economic Relief Package Second. If yesterday was focussed on MSME today, it was about
- Migrant Workers
- Middle-Class Employees
- Street Vendors
1) Migrant Workers with Ration card:
FM announced the launch of the “One Nation One Ration Card” to benefit the migrant workers. This ensures that irrespective of the origin of the card, they will be able to avail of the benefits everywhere. This will also ensure they will have access to fair price shops which they currently don’t have due to being stranded in a different region.
2) Migrant Workers without ration card:
Many migrant workers currently are not registered under the national food security act or any state card. To help them FM announced
- Free food grains for the next two months
- 5 KG grains per person and 1 KG chana per family per month for the next two months
The government is spending Rs.3500 crore for this.
One Nation One Ration Card:
The government will enable the migrant beneficiary to access PDS from any fair price shop in the country. They are attempting to automate the fair pair shop by March 2021. This scheme expects to address the gaps in the current PDS system. Some of the deficiencies are mentioned below
- Since state governments issue ration cards, this meant that beneficiaries could procure food grains only from the designated ration shops within the concerned state.
- If a beneficiary were to shift to another state, he/she would need to apply for a new ration card in the second state. But the procedure had many complications.
The new scheme is launched, keeping in mind the internal migration of our country. Last year, the government launched the pilot project for the inter-state portability of ration cards between Telangana and Andhra Pradesh, and between Maharashtra and Gujarat.
4) Working Capital:
The FM announced Rs 30,000 crore additional emergency working capital funding to be provided to farmers through NABARD. This will be provided for crop loan requirements. This is over and above Rs 90,000 crore to be approved by NABARD through usual finance methods.
Apart from this, Rs 2 lakh crore concessional credit will be extended to help 2.5 crore farmers through Kisan credit cards.
NABARD will extend additional refinance support of Rs 30,000 crore for crop loan requirements of rural co-op banks and regional rural banks.
5) Credit Linked Subsidy Scheme:
The government has declared an extension of subsidy schemes for affordable housing up to March 2020. The scheme amounts to an Rs.70000 Crore boost to the housing sector.
The government will launch a scheme for affordable rental housing for migrant workers/urban poor to provide ease of living by converting government-funded housing in cities into Affordable Rental Housing Complexes (ARHC) under PPP mode through the concessionaire.
FM announced Rs 5,000-crore special credit facility for street vendors by providing them with working capital of up to Rs 10,000, adding this would support 50 lakh, street vendors.
Digital payments will be incentivized for street vendors through monetary rewards and enhanced working capital credit.
The National Association of Street Vendors of India (NASVI) has decided to train street vendors in the measures they need to take while selling food.
The government will provide interest subvention of 2% for prompt payees for 12 months. Relief of Rs 1,500 crore to MUDRA Shishu loaners, which is expected to benefit about three crore beneficiaries.
For creating job opportunities in urban, semi-urban, and rural areas government proposed a Rs 6,000 Crore compensatory afforestation management and planning authority (CAMPA) funds will be set up under Compensatory Afforestation Fund, Act 2016.
The government is proposing a national floor-wise wage rate so that a uniform wage rate prevails across states. Presently, minimum wages apply only to 30 percent of workers. The government also proposed issuing allotment letters and mandatory health check-ups for all employees.
In the current situation, the uncertainty is worse than the risk. Risk can be mitigated or negated, but it is challenging to face uncertainty. Even now, the market is not clear on the way forward with regards to Covid-19 and lockdown. We expected a government commitment to take on the risk factor and be a beacon of hope. The government has shown signs of maturity and responsibility. It has addressed the issues of liquidity and risk reduction. It has allowed credit facility to the needy MSME and required food, items to the migrant workers. They have announced policies to effect ration cards, minimum wages, and moratoriums to existing loans.
We also expect the government to take steps towards becoming part of the global supply chain as desired by the PM.