The nationwide lockdown imposed across the country in the wake of the Coronavirus pandemic has been a big hit to the economy. While an undue pressure was added on the healthcare sector and professionals, other businesses – particularly Micro, Small and Medium Enterprises (MSMEs) suffered a colossal setback. According to the Centre for Monitoring Indian Economy (CMIE), 27 Million Indians between the ages of 20-30 years have lost their jobs in the month of April alone, with migrant workers being the worst affected. Let’s take a look at the timeline and details of the economic stimulus package announced by the Central Government to counter the impact of Covid-19 on the Indian economy and the citizens.
PM Addresses the Nation – 12 May 2020
During his address to the nation on 12 May 2020, PM Narendra Modi announced the Aatma Nirbhar Bharat Abhiiyan (the Self-Reliant India Movement) – an economic stimulus package worth Rs. 20 Lakh Crore (Rs. 20 trillion) equivalent to USD 265 Billion, which approximates to about 10% of India’s GDP. The PM encouraged the citizens to become self-reliant by buying from local brands and businesses as well as by supporting local artists.
FM Reveals the Details of the Stimulus Package – 13 May to 17 May 2020
Union Finance Minister of India, Nirmala Sitharaman started revealing the details of the stimulus package 13 May onward. The Rs.20 trillion package is a mix of monetary and fiscal support, a boost to businesses and agriculture as well as some reforms and growth measures. The details of the package were announced in five tranches as follows:
13 May – First Tranche: Businesses including MSME’s
Under the first tranche of the package Rs. 5,94,550 Cr was allocated to boosting local businesses in terms of emergency working capital, infusing money in stressed 2 Lakh MSMEs, extended EPF support, reduction in EPF, TDS and TCS rates, special liquidity schemes for NBFC/HFC/MFIs, and liquidity injection for DISCOMs.
14 May – Second Tranche: Poor, including migrants and farmers
Rs. 3,10,000 Cr has been allocated to cover free ration for non-card holders, interest subvention for MUDRA Shishu loan holders, special credit facility for street vendors, infusion of money for businesses in tribal regions,provision of credit cards and loans for farmers and shelters with three meals a day for migrants.
15 May – Third Tranche: Agriculture
The package allocates Rs. 1,50,000 Cr to strengthen the agricultural infrastructure including food micro-enterprises, fisheries & aquaculture, animal husbandry, beekeeping, National Animal Disease Control Programme and herbal cultivation.
16 May – Fourth Tranche: New horizons of growth
Fourth tranche focused on providing Viability Gap Funding of Rs. 8,100 Cr. to projects in the following sectors: coal, minerals, defence, airspace, airports, civil aviation, atomic energy and space (ISRO).
17 May – Fifth Tranche: Government reforms
Rs. 40,000 Cr has been allocated to MNREGA to facilitate employment and sustained livelihood for rural and migrant workers.
The stimulus package also includes the following:
- Liquidity Measures announced by RBI amounting to Rs. 8 Lakh Crores.
- Pradhan Mantri Garib Kalyan Yojana (PMGKY) of Rs. 1.70 Lakh Cr to help the poor fight the battle against Coronavirus.
- Rs. 15,000 Cr have been sanctioned for Emergency Health Response Package.
- Last date for Income Tax Returns and GST Returns extended.
- All pending income tax refunds upto Rs. 5 Lakh have been issued immediately.
As a direct consequence of Covid-19, plenty of businesses have been forced to shut shop and as per a survey by All India Manufacturer’s Organisation nearly 35% MSMEs and 37% of self-employed persons are close to winding up their operations as well, despite the financial packages announced by the Centre. How long will the Indian economy take to revive, is a question that only time will answer.