India announces fresh Rs 265,080cr stimulus package
Indian Finance Minister Nirmala Sitharaman yesterday announced a fresh stimulus package totalling Rs 265,080 crore for the Covid-19-battered national economy, including a new job creation scheme by giving subsidy to those establishments that make new hires.
Sitharaman said Rs 3,000 crore will be given to the EXIM Bank for promotion of 'Project Exports' through lines of credits.
The EXIM Bank extends lines of credits (LOC) on behalf of the government of India as assistance to developing countries under Indian Development and Economic Assistance Scheme (IDEAS) Scheme.
She also announced a Rs 900-crore grant for Covid-19 vaccine research but made it clear that the money does not cover the actual cost of vaccine and distribution expenses, which will be made separately when the vaccine is available.
A new initiative to incentivise job creation, measures for 26 stressed sectors, tax benefits for home buyers and real estate developers and fertiliser subsidy to farmers are part of the third booster shot unveiled by the finance minister at a media conference in New Delhi for the Indian economy which is projected to slip into a recession.
The subsidy to create jobs would be to cover for retirement fund contributions by employees as well as employers for two years, she told the media in New Delhi.
Employees contribution (12 per cent of wages) and employer's contribution (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said adding the scheme would be operational till June 30 next year.
Sitharaman announced a Rs 65,000-crore fertiliser subsidy for farmers in the upcoming crop season.
She also said an additional outlay of Rs 10,000 crore will be provided for a scheme for employment for the poor in the current financial year (2020-21). This, she added, will spur growth of the rural economy.
The finance minister also announced an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 31, 2021. Under the scheme, fully guaranteed and collateral-free loans are provided to small and micro enterprises.
Sitharaman also announced a guaranteed credit scheme for supporting 26 stressed sectors. The scheme would cover entities in the stressed sectors identified by an official committee plus healthcare sector with credit outstanding of above Rs 50 crore and up to Rs 50 crore as on February 29, 2020.
She said the Indian economy is witnessing a strong recovery after a long and strict lockdown forced by the pandemic and macro-economic indicators are pointing towards this.
Giving out details of recovery, she said composite purchasing managers index (PMI) rose to 58.9 per cent in October versus 54.6 per cent in the previous month, registering the strongest increase in output in close to nine years and energy consumption growth trended higher in October at 12 per cent year-on-year while Goods and Services Tax (GST) collections have grown 10 per cent to over Rs 1.05 lakh crore.
She said bank credit has improved 5.1 per cent and foreign direct investment (FDI) inflows in April-August at $35.37 billion has seen a 13 per cent rise on a year-on-year basis.
The media conference by Sitharaman came on a day when top opposition Congress leader Rahul Gandhi targeted the government of Prime Minister Narendra Modi over the state of the economy, claiming the country has entered into a recession for the first time in history due to the policies of the government.
"India has entered into recession for the first time in history. Mr Modi's actions have turned India's strength into its weakness," he said on Twitter.
Rahul cited a news report wherein the Reserve Bank of India has said that the country's GDP is likely to contract by 8.6 per cent in the July-September quarter, which means the Indian economy is likely to enter into a "technical" recession for the first time in history.
The Indian economy is projected by the International Monetary Fund to contract 23.9 per cent amid a stringent lockdown to curb the spread of the Covid-19.