NEW DELHI: The finance ministry on Monday announced a slew of measures to help the Covid-battered economy, including fresh credit for MSMEs, and targeted support to the healthcare and tourism sectors.
The package includes Rs 1.10 lakh crore of credit guarantee scheme, of which Rs 50,000 crore will be for the healthcare sector, with a three-year single loan of up to Rs 100 crore carrying an interest of 7.95%.
Loans to other sectors such as tourism and hospitality would come at 8.25% per annum interest rate. Special support was given to the hospitality sector in the form of retail loan worth Rs 10 lakh to travel agencies and Rs 1 lakh loan for registered tourist guides.
“They can use the loans to pay old loan or to buy a vehicle or start a new business,” Finance Minister Nirmala Sitharaman said while announcing the relief package for the tourism sector.
A Rs 7,500 crore credit guarantee scheme was extended to banks for existing NBFC-MFIs or MFIs for lending up to Rs 1.25 lakh to about 25 lakh small borrowers.
Experts claimed while the intent is good, this will hardly help the sector which have about six crore borrowers.
Apart from that, the government increased the cap for availing guarantee under the existing Emergency Credit Line Guarantee Scheme from Rs 3 lakh crore to Rs 4.5 lakh crore and extended the timeline of many existing schemes under Atmanirbhar package for one more year, like Atmanirbhar Bharat Rozgar Yojana and Production linked scheme for one more year.
The Centre has also extended the timeline for previously announced free foodgrains scheme for the poor from May to November 2021.
The outgo from this scheme in FY22 is estimated at Rs 93,869 crore. This, along with an additional allocation of Rs 14,775 crore towards fertiliser subsidy, takes the size of the relief package to Rs 6.29 lakh crore.
However, as most of the announcements were part of the credit guarantee scheme, the fiscal impact for the government will be limited, said Siddharth Sanyal, chief economist and head, Research, Bandhan Bank.
Aditi Nayar, chief economist at ICRA, estimates the step-up in the fiscal outgo within FY22 based on fresh announcements at Rs 60,000 crore.
That said, Monday’s package packed more wallop due to the much-needed attention on health, whose FY22 budget allocation was deemed grossly inadequate. An additional Rs 23,220 crore was directed towards health expenditure, with special emphasis on paedetric care.
Emergency cash
An additional Rs 1.5L cr allocated for Emergency Credit Line Guarantee Scheme; Rs 7,500 crore for micro finance institutions.
Loan guarantee
Rs 1.1 lakh crore loan guarantee scheme for Covid-hit sectors, of which Rs 50,000 crore is for the health sector to scale up medical infrastructure.
Electricity
Of Rs 3,03,058 crore allocated for reformbased result-linked power distribution scheme, the Centre will spend Rs 97,631 crore during FY22-26.
Food grains
Centre to spend Rs 93,869 cr during May-November 2021 for free food grains under PMGKY, bringing total cost to Rs 2,27,841 crore.
Insurance
Rs 88,000 crore to be spent during FY22-26 to boost export insurance cover, plus Rs 33,000 crore for projects through national export insurance account.
Public health
A total of Rs 23,000 crore to be spent under new scheme for public health in FY22, of which Center will spend Rs 15,000 crore.
Broadband
Centre to spend Rs 19,041 crore during FY22-23 under ‘Broadband to each village through BharatNet PPP model’.
Tourism
Working capital / personal loans for those working in tourism sector with 100% guarantee; Government’s financial implication: Rs 100 crore.