FM announces Rs. 1.1 lakh-crore loan guarantee for COVID-hit sectors
Union Finance Minister Nirmala Sitharaman addressed a key press conference on Monday, announcing a slew of economic relief measures. Notably, India's economy was already ailing when the COVID-19 pandemic hit, further exacerbating the situation. India's GDP (Gross Domestic Product) shrank by 7.3% in FY2020-21. One of the key announcements is a Rs. 1.1 lakh crore loan guarantee for sectors affected by COVID-19.
4 of 8 relief measures absolutely new, says FM
Introducing eight economic relief measures, Sitharaman said that four among them were "absolutely new" and one new item was specific to health infrastructure. "There are eight other items which pertain to growth in general, export, and also related to employees. In that, six are totally new," said the Finance Minister, addressing the presser alongside Minister of State (MoS) Finance Anurag Thakur and other officials.
Rs. 1.1 lakh crore loan guarantee for COVID-hit sectors
Out of Rs. 1.1 lakh crore loan guarantee, Rs. 50,000 crore will be directed toward scaling up medical infrastructure in underserved areas (Tier-II/III cities), Sitharaman said. Up to 75% of the guarantee cover will focus on new projects and up to 50% on expansion projects. A guarantee cover of up to 75% will be granted to both new and expansion projects in aspirational districts.
Maximum loan: Rs. 100 crore with up to 3-year guarantee
Loans will be given to a maximum of Rs. 100 crore with up to a three-year guarantee cover, provided by the National Credit Guarantee Trustee Company Limited (NCGTC). The interest rate has been capped at 7.95%. The normal interest rate without guarantee cover is 10-11%. The remaining Rs. 60,000 crore is dedicated to other sectors, where the interest rate is capped at 8.25%.
Emergency Credit Line Guarantee Scheme overall cap raised
The overall cap of the Emergency Credit Line Guarantee Scheme—launched as part of the Aatmanirbhar Bharat package—has been raised from Rs. 3 lakh crore to Rs. 4.5 lakh crore. Sitharaman said Rs. 2.69 lakh crore has already been dispersed through ECLGS-1.0, 2.0 and 3.0.
Credit Guarantee Scheme to benefit 25 lakh people
Sitharaman announced a Credit Guarantee Scheme, which will benefit 25 lakh people. Loans up to Rs. 1.25 lakh will be given to the smallest borrowers by Micro Finance Institutions, she said. The focus is on new lending and not on the repayment of old loans, she added. The interest rate is 2% below the RBI prescribed rate, with a three-year loan duration.
Financial support for travel and tourism sector
Sitharaman also announced financial support for the travel and tourism sector. The support will cover 10,700 regional tourist guides and 904 travel and tourism stakeholders ("travel agents"). Loans will be provided under 100% guarantee up to Rs. 10 lakh for travel agents and Rs. 1 lakh for tour guides. There will be no processing charges, waiver of foreclosure/prepayment charges, and no additional collateral requirement.
First 5 lakh tourist visas free
Further, once visa issuance is restarted, the first five lakh tourist visas will be issued free. The scheme will be applicable till March 31, 2022, or until the five lakh visas are issued, whichever is earlier. The total financial implications amount to Rs. 100 crore.
Atmanirbhar Bharat Rozgar Yojana extended till March 2022
The Atmanirbhar Bharat Rozgar Yojana is extended from June 30, 2021, to March 31, 2022. Over 21.4 lakh people of nearly 80,000 establishments have already benefited from the scheme, Sitharaman said. The NBS subsidy of Rs. 27,500 crore in FY2020-21 has been increased to Rs. 42,275 crore in FY2021-22. The extension of PMGKAY scheme now puts the total cost at Rs. 2,27,841 crore.
FM announces Rs. 23,220 crore public health scheme
Sitharaman also announced a Rs. 23,220 crore public health scheme which will focus on short-term emergency preparedness, particularly for pediatric care/beds. The availability of ICU beds, oxygen supply, equipment, medicines, ambulance services, etc. will be increased.
21 climate-resilient crop varieties released
Sitharaman released 21 climate-resilient crop varieties of rice, peas, millet, maize, soyabean, quino, buckweat, etc. The ICAR developed bio-fortified crop varieties having high nutrients. A revival package of Rs. 77.45 crore was announced for financial restructuring and infusion of funds to NERAMAC. It proposes to set up Northeastern Centre for organic cultivation and facilitating equity finance for entrepreneurs.
Rs. 88,000 crore boost to the export insurance cover
Sitharaman also announced a Rs. 33,000 crore boost for project exports through the National Exports Insurance Account (NEIA). She also announced a Rs. 88,000 crore boost to the export insurance cover by infusing equity in the Export Credit Guarantee Corporation over five years. The tenure of the PLI scheme for large-scale electronics manufacturing is extended by one year till 2025-26, she added.
Rs. 19,041 crore to ensure broadband in every village
An additional amount of Rs. 19,041 crore will be provided to BharatNet to take broadband to every village, the FM announced. She also announced a total allocation of Rs. 3.03 lakh crore for reform-based result-linked power distribution scheme.