Small doses

Synopsis: The first relief package for the second COVID-19 wave falls short of expectations

Few major highlights of relief package:

Rs 1.1 lakh crore loan guarantee scheme for COVID affected sectors

Additional fund for Emergency Credit Line Guarantee Scheme

Extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) – Free food grains from May to November 2021 and Aatma Nirbhar Bharat Rozgar Yojana till 31st March 2022

Financial support to more than 11,000 Registered Tourists/ Guides/ Travel and Tourism Stakeholders and Free one-month Tourist Visa to first 5 lakh tourists

Advantages of relief measures:

Health projects in the hinterland: Additional spending to ramp up paediatric healthcare, with guarantees for ₹50,000 crore low-interest loans for health projects, will improve health care facilities in the hinterland. It is also critical to cope with future pandemic waves.

Challenges with the relief measures:

• Free visas: Free visas are a good idea, but are unlikely to gain results till India has a firmer grip on the pandemic by providing vaccines for all, including for those under 18.
• Weak demand is a bigger concern for the industry this year as high inflation. But the direct stimulus to demand is not enough for industries in the government relief measures.
• High fuel prices are not taken care of. If the government lowered the fuel process, then this would dampen inflation, empower RBI to lend greater support to grow, and leave a little more money in people’s hands to spend.