The Centre extended liquidity support to various stressed sectors of India Inc as well as micro credit borrowers and export oriented industries. Accordingly, Finance Minister Nirmala Sitharaman announced eight relief measures worth Rs 6,28,993 crore.
These measures entail enhancement of existing relief schemes such as ECGLS and support for state governments. Besides, a total of four new measures were announced to provide loans to micro credit borrowers as well as tourism industry.
Further, Sitharaman announced Rs 50,000 crore guaranteed loan for creation of medical infrastructure. She said that ECLGS scheme will be enhanced by Rs 1.5 lakh crore. Furthermore, she announced a Rs 1.1 lakh crore loan guarantee scheme for Covid-affected sectors.
She said that first 5 lakh tourist visas will be issued free of charge. This step will be taken once the visa issuance start. Apart from these the Atmanirbhar Bharat Rozgar Yojana has been extended till March 31, 2022 entailing government PF liability of employees and employers depending on the size of the organisation.
On exports, the minister announced support extended to National Export Insurance Account (NEIA) worth Rs 33,000 crore for project exports from India. Similarly, support has been extended to ECGC (Export Credit Guarantee Corporation of India) worth Rs 88,000 crore for merchandise exports.
Additional funds worth Rs 19,041 crore was announced for Digital India scheme. Also, the tenure of large-scale electronics manufacturing PLI scheme has been extended.
In addition, the Centre will come out with a new streamline policy for PPP and asset monetisation.
“Today’s announcement contained a mix of new schemes focussed on relief for the pandemic-affected sectors, extension of earlier schemes, as well a reiteration of recent announcements such as free food grains up to November 2021,” said Aditi Nayar, Chief Economist, ICRA.
“The new schemes announced for the pandemic-affected sectors include the extension of guarantees of around Rs 2.6 trillion, which will have a limited fiscal cost upfront, even as their success will hinge on offtake.”
According to Madhavi Arora, Lead Economist, Emkay Global Financial Services: “While the measures are welcome and target Covid-sensitive sectors, most of the fiscal support is still below the line and in the form of loan guarantees, and not direct stimulus.”
“Overall, amid various push and pull, there is a likelihood of fiscal slippage to the tune of around 0.5 per cent from the initially budgeted 6.8 per cent.”
Further, Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research said: “The other significant measure from the government is a credit guarantee scheme for the MFI sector which has also been particularly impacted by the second wave of Covid.”
“Since the MFI sector has exposure to the informal sector whose businesses have been substantially affected by the pandemic, its collections have taken a hit in the current quarter.”
In addition, Aloke Bajpai, CEO & Director, ixigo said: “The announcement of free tourist visa to first 5 lakh tourists coming to India by 31st March 2022 is a welcome step. This move will surely boost the morale of travel and tourism sector and aid in faster recovery of inbound tourism. With vaccination drives gathering pace and resumption of activities we are optimistic normal international flights will resume operations soon.”
“We expect to see similar moves from other countries to attract foreign tourists once borders open.”