Atmanirbhar Bharat 3.0

Context- Finance Minister Nirmala Sitharaman announced the next set of stimulus package to boost the coronavirus-hit economy.

What are the key highlights of 3^rd stimulus package?

Union Finance Minister on recently announced a third stimulus package to help pull the Covid-19-battered economy. The FM announced 12 measures under Atmanirbhar Bharat3.0 which includes-

1. Atmanirbhar Bharat Rozgar Yojana.
2. Emergency Credit Line Guarantee Scheme (ECLGS) 2.0.
3. Atmanirbhar Manufacturing Production-Linked Incentives for 10 champion sectors.
4. To boost demand in Real Estate sector, relief for home buyers and sellers.
5. Support for construction and Infrastructure- Relaxation of EMDs and Performance Security on government tenders.
6. Income tax relief for homebuyers and developers.
7. Infrastructure Debt Financing.
8. Support for Agriculture.
9. Boost for rural employment.
10. Boost for Project Exports.
11. Capital and Industrial Stimulus.
12. Research and Development grant for Covid-19 vaccine.

Previously announced package-

1. Pradhan Mantri Garib Kalyan Yojana (PMGKP) – The government had announced Rs 1.70 lakh crore during March to protect the poor and vulnerable sections from the impact of COVID-19 crisis.
2. The Aatmanirbhar Bharat Abhiyan package– The stimulus of Rs 20.97 lakh crore in May, largely focused on supply-side measures and long-term reforms.

What are the key areas of focus of this fiscal package?

1. Incentivizing job creation-

• Boost formal sector employment-Providing incentives to EPFO-registered firms to hire more employees could lead to job creation. Formalization of the existing informal work force in urban areas.
• MGNREGA boost– Further additional outlay of Rs 10,000 crores will be provided for PM Garib Kalyan Rozgar Yojana in the current financial year.

2. To boost demand in Real estate sector –

• Rs 18,000 crores additional outlay for PM Awas Yojana (Urban) over the Budget Estimates for 2020-21. This is over and above Rs 8,000 core already this year.
• This will help 12 lakh houses to be grounded and 18 lakhs to be complemented.
• The scheme will also guarantee additional jobs to 78 lakhs.

3. To boost manufacturing production-

• Production Linked Incentives with proposed expenditure of ₹1.46 lakh crore over five years will be offered to ten stressed sectors to boost domestic manufacturing.
• And create an efficient domestic manufacturing ecosystem.

4. To Research and Development grant for Covid-19 vaccine-

• Rs 900 crores provided for Covid-19 Suraksha Mission for the development of the Indian vaccine to the Department of Biotechnology.

5. Emergency Credit Line Guarantee Scheme (ECLGS) 2.0-

• EECLG 2.0 for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021.
• Under this credit scheme, banks will be able to lend to stressed sectors from 26 sectors identified by the K.V. Kamath committee earlier this year.
• The new scheme will have a 1-year moratorium and 5 years of repayment.

What are the challenges to India’s economic recovery according to RBI?

• The foremost risk stems from the global economy now at risk from the second wave of COVID-19.
• The Second major risk is the stress that has been intensifying among households and corporations

Way forward-

• Ensuring credit off-take of previously announced schemes amongst the poorest sections must be a priority.
• Forcing banks to lend to companies where assessing risk has become a challenge due to the pandemic puts banks at a bigger risk.