Just ahead of the festive season, the Central government announced a long-awaited stimulus package worth INR 2.6 lakh crore on Thursday. Under the Atma Nirbhar Bharat Abhiyan 3.0, Finance Minister Nirmala Sitharaman made 12 announcements to help the economy bounce back. Eminent corporate lawyer and managing partner of OP Khaitan & Co — Gautam Khaitan called it Diwali Bonanza for the people of India. The new announcement by the government is under the INR 30 lakh crore COVID economic package.
Gautam Khaitan said that the focus of the government via the stimulus package is on middle-income groups and the stressed sectors of the economy. “This time the objective of the package is to boost demand, employment generation, supporting stressed sectors, boost in infrastructure and housing,” he added.
The announcement came immediately after RBI said that India had entered into a historic ‘technical recession’ in the first half of the current fiscal year. The Central Bank had said that GDP contracted 8.6% in the second quarter of FY2020-21 which had slumped 24% in the first quarter. However, governor Shaktikanta Das also projected that the economy can return to the normal growth rate in the October-December quarter.
FM Sitharaman announced Atmanirbhar Bharat Rozgar Yojana aimed at generating employment in the formal sector. “The government has announced to provide subsidy to all the companies registered under the Employees’ Provident Fund Organisation for all the employees who earn less than INR 15000 and are hired between 30 September 2020 and 30 June 2021,” says Gautam Khaitan. For all the firms that have less than 1,000 employees, the government will provide a 12% employer contribution along with the 12% employee EPFO contribution.
Khaitan said that the tripling of the fund allocation under the Pradhan Mantri Awas Yojana is directly going to benefit the middle-class home buyers. “As opposed to just INR 8,000 crore under the scheme, now the government has allocated INR 26,000 crore this time. This is not only in the interest of the middle class but also the developers who are continuously facing hardships from the past half a decade.”
Recently, KV Kamath Committee, constituted by the RBI identified 26 stressed sectors. The government has decided to extend INR 3 crore emergency credit line guarantee scheme till 31 March 2021 to all the companies identified under the stressed sectors by the Kamath Committee. “This is good for the MSMEs, as they are one of the most hard-hit sectors in the country. Now they can get access to guaranteed collateral-free credit with a one-year moratorium on principal repayment and another year of repayment under the scheme,” says Gautam Khaitan.