FM Nirmala Sitharaman unveils Aatmanirbhar Bharat economic stimulus 3.0 of Rs 2.65 lakh crore
The government on Thursday unveiled its latest economic stimulus measures worth Rs 2.65 lakh crore under the Aatmanirbhar Bharat strategy, which aims to boost employment, extend credit facility, and create an environment for higher consumer demand.
On the present state of the economy, given the very negative impact due to COVID-19, Union Finance Minister Nirmala Sitharaman said,
“There is a strong recovery of economy. It is not just pent up demand.”
The finance minister cited various parameters like GST collections, energy demand, bank credit, and stock market movement as strong indicators of an economy on the recovery path.
The Aatmairbhar Bharat stimulus package 3.0 further supports the first package announced in May and October this year, which touched various segments like rural and urban employments, credit facilities for SMEs, Income Tax relief on real estate purchases, etc.
The finance minister announced that the government will take over the responsibility of provident fund payment of new employees hired during this period, subject to certain conditions. This is expected to incentivise companies to hire more people.
The government has also decided to further extend the emergency credit line guarantee scheme till March, 2021, to provide support for all the 26 stressed sectors identified. This also enhances the credit limit for the SMEs.
As part of I-T relief for home buyers and real estate developers, the government has decided to expand the differential between guidance value and agreement value to 20 percent from the present level of 10 percent, subject to certain conditions.
The finance minister also announced various relief measures for urban housing, funding infrastructure, rural employment, and agriculture sector, which is expected to boost employment and stimulate demand.
The government has also earmarked Rs 900 crore for development of COVID-19 vaccine.
In the backdrop of COVID-19 pandemic, the government has come out with several economic stimulus measures to kickstart the economy and maintain the growth momentum. On May 14, Prime Minister Narendra Modi announced a stimulus package worth Rs 20 lakh crore, which constituted around 10 percent of India’s GDP under the Aatmanirbhar Bharat Abhiyan strategy.
These measures were a combination of liberalised regulations and fiscal incentives from the government to help both the marginalised sections of the society as well as small and medium enterprises.
The government also came out with a package worth Rs 46,675 crore, which largely focused on incentives for central government employees to spend more on consumer durables during the festive season.
On Wednesday, the government announced the production linked incentive (PLI) scheme for 10 sectors with an outlay of nearly Rs 2 lakh crore ($27 billion) spread over a period of five years. The 10 key sectors include textile and automobiles which would help India become self-reliant, boost manufacturing as well as enhance exports.
At the same time, a report said the GDP is likely to contract by 8.6 percent for the July-September period, which technically meant the country has entered into recession as it meant two successive quarters of negative growth.