'Atmanirbhar' stimulus: Employment, income-tax relief for home-buyers, boost for vaccine
Union Finance Minister Nirmala Sitharaman on Thursday announced a fresh economic stimulus to spur economic growth and boost demand. The FM said that there are signs of a strong economic recovery in India. As part of the government's Atmanirbhar Bharat Abhiyaan 3.0, Sitharaman announced income tax relief for home-buyers, a Rs. 900 crore boost for COVID-19 vaccine R&D, more jobs, etc.
RBI predicts likelihood of economy returning to growth in Q3
Addressing a press conference, Sitharaman noted that the Reserve Bank of India (RBI) has predicted a strong likelihood of the Indian economy returning to positive growth in the third quarter of the fiscal year 2020-21, ahead by a quarter of the earlier forecast. She also highlighted that active COVID-19 infections in India have declined from 10 lakh in mid-September to 4.89 lakh cases currently.
'Economic growth sustainable, not because of pent-up demand'
Sitharaman said, "The markets are at a record high. Record market capitalization is happening. Net investment FPIs are positive. And the reserves of foreign exchange, like never before, are at $560 billion." The FM added that prominent economists suggest the economic rebound is not just due to pent-up demand. "It's a sustainable, strong economic growth," she added.
Boost for employment in Atmanirbhar Bharat Abhiyaan 3.0
Sitharaman announced a fresh scheme—Atmanirbhar Bharat Rozgar Yojana—to incentivize the creation of new employment. New employees recruited by EPFO-registered organizations, earning under Rs. 15,000/month, will benefit from this scheme for two years. A new employee is someone who has never been registered under the EPFO before, or had lost their job between March 1, 2020-September 30, 2020, and was re-employed after October 1, 2020.
Atmanirbhar Bharat Rozgar Yojana: Government subsidy on eligible employees' EPF
Under the scheme, the Centre will pay an eligible employee's EPF contribution of 12%, if their establishment employs more than 1,000 people. For establishments employing under 1,000 people, the Centre will pay an employee's EPF contribution of 24%.
Emergency Credit Line Guarantee Scheme extended till March
Further, the existing Rs. 3 lakh crore Emergency Credit Line Guarantee Scheme—a fully guaranteed and collateral-free scheme—has been extended till March 31. Sitharaman announced the launch of ECLGS 2.0 for 26 sectors stressed due to COVID-19 with the aim of helping entities sustain employment and meet liabilities. Entities will get additional credit up to 20% of outstanding credit; the tenure will be five years.
Boost for Atmanirbhar Manufacturing Production-linked incentives in Champion sectors
Additionally, Rs. 1.46 lakh crore boost for Atmanirbhar Manufacturing Production-linked incentives for 10 Champion sectors was announced. The move is aimed at boosting the competitiveness of domestic manufacturing and employment. Rs. 18,000 crore additional outlay will be provided over the budget estimates for Pradhan Mantri Awas Yojna in urban areas. The government is aiming to create 78 lakh additional jobs with the move.
Rs. 65,000 crore to ensure fertilizers for farmers
The government will provide Rs. 6,000 crore of Equity to Debt Platform of NIIF (National Infrastructure & Investment Fund) where private equity participation will also come in. Rs. 65,000 crore will be directed toward ensuring the adequate availability of fertilizers to farmers. To boost rural employment, an additional outlay of Rs. 10,000 crore will be provided for PM Garib Kalyan Rozgar Yojana.
Income tax relief for home-buyers
For primary residential real estate sales, valued up to Rs. 2 crore, the Centre has raised the relief on the difference between circle rate and agreement value to 20% from 10%. Consequential relief up to 20% shall also be allowed to buyers of these units. The income tax relief is only meant for first-time buyers and will be available till June 30, 2021.
Rs. 900 crore for COVID-19 vaccine R&D
Rs. 900 crore will be provided for COVID Suraksha Mission for research and development of the Indian COVID vaccine. Rs. 3,000 crore will be released to EXIM Bank for promotion of project exports through Lines of Credit under IDEAS Scheme. Supported projects cover railways, power, transmission, road and transport, etc. Rs. 10,200 crore additional budget outlay will be provided toward capital and industrial expenditure.
'Size of stimulus Rs. 2.65 lakh crore'
Sitharaman said, "The size of the stimulus being provided by the government, as part of the 12 announcements made today under Aatmanirbhar Bharat 3.0, amounts to Rs. 2.65 lakh crore, 15% of the national GDP as stimulus takeaway."