India on Thursday announced a package of Rs 170,000 crore under a new scheme, the Pradhan Mantri Gareeb Kalyan Yojana (PMGKBY), to address the immediate economic distress caused by a covariate pandemic disease (Covid-19) and ensure food and cash reach the marginalized segments of society.
Finance Minister Nirmala Sitharaman at a press conference in the capital announced a series of measures that focused on additional food transfers without any money, cash for vulnerable segments, concessions on government programs aimed at helping households reduce consumption and support those at the front of the battle against a pandemic. The primary beneficiaries of these measures include those below the poverty line, farmers, women, senior citizens, the physically disadvantaged, construction workers and workers in the unorganized and organized sector.
Sitharaman underscored that within 36 hours of the closure – Prime Minister Narendra Modi had led a national shutdown for three weeks on Tuesday night – the government had taken measures to take immediate care of the welfare of the poor. However, it did not address the fiscal implications of the scheme, nor did it announce measures for other sectors that were also severely affected after the restrictions and closures. There was talk of incentives targeting businesses, large and small, as well as paid individuals, but it was not mentioned during Thursday’s conference – nor any indication of when such a package could be expected.
Sitharaman has released a medical coverage of 50 garments per person for doctors, healthcare staff and sanitation staff, acknowledging their contribution during this time of crisis.
PMGKY had two broad components: the first was focused on ensuring food availability and support; and second, about income support.
In terms of food, Sitharaman said that 800 million people – two thirds of the country’s population – will now be entitled to, in addition to the existing distribution of five kg of wheat or rice, an additional five kg of wheat or rice per month for the next three months, free of charge. During this period they will also receive one kilogram of pulses, according to the specific regional pulse variant in their geographical area. “This is to ensure that no one is left hungry,” Sitharaman stressed.
In terms of direct financial support, FM announced support in eight different categories using the direct benefit transfer framework.
The first was aimed at farmers who receive direct financial support of Rs 6,000 a year under the PM-Kisan scheme. Sitharaman said the next tranche of money – Rs 2000 – would be “cluttered” and given immediately. “This will benefit 86.9 million farmers,” the foreign minister said.
The second was for workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS). From a daily salary of Rs 182, they will now be able to get Rs 202. “It will help increase revenue to 000 2,000 per worker,” Sitharaman said.
The third measure was for economically poor widows, citizens over the age of 60 and physically disadvantaged. “They will receive an ex-gratia amount of 1,000. The measure will benefit 30 million poor citizens, “FM said. The amount is given in two installments.
The fourth measure was aimed at women holding Jan Dhan accounts. “There are 200 million women account holders Jan Dhan. The government will give them 500 euros a month for three months to ensure that they can run households in this period of disruption. ”
The related announcement was for users of the PM Ujjwala scheme, in which over 83 million households received gas bottles. “In three months, these households will receive free bottles.” Anecdotal evidence suggests that many households considered the cost of refilling gasoline bottles. Minister of State for Finance Anurag Thakur, sitting next to Sitharaman, underlined that by these measures, the government is trying to ensure that poor families have access to food, income and gas for cooking.
The fifth measure focused on women’s self-help groups. Sitharaman pointed out that there are 6.3 million SHGs in the country and 70 million households are members of these groups. “So far they have been eligible for a collateral-free loan of up to £ 10. That amount will now rise to 20 RKS. Self-help groups are eligible for increased collateral-free loans, which will put more money in their hands, “the finance minister said.
The sixth measure targeted organized workers. This had two components. The government, the FM announced, will also contribute to the share of employees and employers of the Employer Provision Fund in the next three months. “The government will give both 12% share of employees and 12% share of employers – a total of 24% per month for three months – to ensure that there is no interruption in the continuity of contributions to EPFO. This will apply to institutions with less than 100 employees and in which 90% of employees earn less than Rs 15,000 a month. ”
Another interconnected measure was the government’s decision to amend the anticipated fund regulation system to allow employees to withdraw 75% of the amount or a maximum of three months’ pay, whichever is lower, from their accounts.
The seventh announcement was for construction workers. FM said there is already a fund for the welfare of construction and other workers. At present, it was 31,000 rune crowns, with 35 million workers registered under it. “We have instructed state governments to use the funds to assist construction workers in protecting them.”
And the latest announcement was about mineral resources, with FM asking state governments to use those funds to supplement medical testing and screening to fight coronaviruses.
Congress MP Rahul Gandhi said the government’s announcement of a “financial aid package” is the first step in the right direction. “… India owes its farmers, day laborers, workers, women and the elderly the burden of non-existent closure,” he tweeted.
Trinamool Congressional Representative Derek O’Brien said the measures are similar to those already announced by the states. “The center is being alerted to aid plans made a week ago by state governments like West Bengal – free meals for the poor, health insurance for champions fighting the crown and ~ 1000 for daily bets under the new Prochesta program,” he said. adding that the Center’s move would complement the state’s efforts.
Meanwhile, the Communist Party of India (Marxist) said that 1,000 elderly, widowed, with different options, were too few; and that health insurance to the government does not come for free.
Experts welcomed the announcement of support for farmers. But its implementation can face challenges. Aadhaar-based enrollment and cash transfers, slow internet connections in many rural centers and messy land records have slowed the PM-Kisan program, the agriculture ministry said in January.
Deloitte’s India partner Gokul Chaudhri hoped for a broad comprehensive economic stimulus package and said the effective implementation of aid for the poor at Rs 1.7 lakh was key. “The first set of measures rightly focused on basic well-being for the underprivileged. The concerns of other stakeholders in the society, such as those affected in the tourism, aviation and hospitality sectors, are awaiting. “
Indian Industry CEO Chandrajit Banerjee said: “The whole package is expected to alleviate the difficulties currently facing the poor and distressed. However, the government could be more aggressive in spending with a total fiscal stimulus of 2.5-3% of GDP- and if the disorders continue for the next three months. “
Experts also said that the 24 percent exemption from the Insurance Fund (EPF) contribution is a measure to deter tax cuts. Richa Mohanty Rao, partner, Cyril Amarchand Mangaldas, said, “amidst such uncertain times, the government’s decision to cover the cost of the insured fund for three months under the EPF Act will also provide much-needed assistance to employers. as employees. However, this initiative will greatly benefit the MSME (SME) sector. “
Sensex raised over 5% in anticipation of a comprehensive economic stimulus package ahead of the finance minister’s press conference, but lost some of its profits immediately after announcing it would close at 29,947, up 4.9%.
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