Announcements of Stimulus package by Finance Minister - I

Last Updated On: Nov. 12, 2020, 5:47 p.m.
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ANNOUNCEMENTS OF STIMULUS PACKAGE BY FINANCE MINISTER

On Thursday (12-11-2020), Finance Minister Nirmala Sitharaman addressed a press conference and announced Athmanirbhar 3.0 stimulus package worth Rs. 2.65 Lakh Crore to bring steam into corono-hit.

On this day 12 Announcements of Stimulus package by Finance Minister. These 12 Announcements are expected to lead to more creation of job and provides a budgetary push in the big-infrastructure spearding among others.

Finance Minister began with the summary of State Economy

She started with the strong recovery of the State Economy

  • Composite Purchase Managers Index (PMI) rose 58.9 in October Vs. 54.6 last month, registering strong increase in output in close to 9 years.
  • COVID- 19 cases decline from over 10 lakhs to 4.89 lakh active cases including Case of Fatality rate (CFR) 1.47 percent.
  • Energy Consumption growth tend to be in higher percent in October (12% YoY).
  • Collection of GST grossed Rs. 1.05 lakh crore in October – 10% YoY
  • Bank Credit YoY growth improved by 5.1% on 23rd October 2020.
  • There was growth in Daily Railway Freight Tonnage by an average 20% YoY vs. 12% in the previous week.
  • FDI inflows from April- August at USD 35.37 billion – 13% rise YoY.
  • Market are at high records, record market capitalization, FPIs net investments +ve’s, Forex Reserves-USD 560 billion.
  • A strong livelihood of Indian Economy returning to positive growth in Q3: 2020-21 by a quarter of the earlier forecast was predicted by RBI.
  • Prominent Economist suggests that the rebound is not only due to pent up demand, but also strong economic growth.

 

1. Emergency Credit Scheme Extended till 31/3/2021.

This was announced as a part of Athmanirbhar Bharat Abhiyaan.

  • This scheme is extended till 31st March 2021
  • Eligible entities- MSME units, business enterprises, Individual loans for business purposes and MUDRA borrowers.
  • This scheme is fully guaranteed and collateral free.
  • Additional Credit upto 20% of outstanding loans as on 29.2.2020 for entities outstanding credit upto Rs. 50 Crores as on 29.2.2020 and annual turnover upto Rs. 250 crore, which were upto 60 days past due as on 29.2.2020.

Scheme update as on 12.11.2020

a. Rs. 1.52 lakh Crore disbursal.

b. Rs.2.05 lakh crore sanctioned to 61 lakh borrowers.

 

2. New Scheme AtmanirbharBharatRozgarYojana being launched to incentive job creation during COVID-19 recovery.

Atmanirbhar Bharat Rozgar Yojana.

The Central Government to provide subsidy for 2 years in respect of new eligible employees engaged on after 1.10.2020 at a following scale

a. Establishments employing upto 1000 employees: Employee’s contibutions 12% wages & Employer’s Cotribution 12% wages totally 24% of wages.

b. Establishments employing more than 1000 employees: Only EPF (Employee Provident Fund) contributions (12% of EPF wages).

 

3.Rs.1.46 lakh Crore boost for Atmanirbhar Manufacturing Production – Linked  incentives  for 10 champion sectors.

a. Government has already approved PLI schemes for 3 sectors at a cost of Rs.51,355 crores as follows;

  • Mobile manufacturing and specifies electronics components at a cost of Rs.40,955 crore.
  • Critical key starting Materials (KSM), Drug Intermediates, and Active Pharmaceuticals Ingredients at a cost of Rs. 6940 crore.
  • manufacturing of medical devices at a cost of Rs. 3420 crore.

b.10 more Champion sectors will now be covered under the Production Linked Incentives Scheme to boost the competitiveness of domestic manufacturing.

c. This is expected to give a significant boost to Economic Growth and Domestic Employment.

 

Government will launch the Production Linked Incentive(PLI) Scheme in the following sectors:

Sector Estimated Expenditure
Advance Cell chemistry Battery 18,100
Electronic/Technology products 5,000
Automobiles/Auto components 57,042
Pharmaceuticals drugs 15,000
Telecom & networking products 12,195
Textile Products 10,683
Food Products 10,900
Speciality Steel 6,322
High Efficiency solar PV models 4,500
White goods 6,238
Total 1,45,980

 

 

4. Rs. 18,000 crores Additional Outlay for PM Awaas Yojana- Urban:

A number of measures have been taken in the past several months for the revival of the Housing and Real estate sector. These measures have been contributed to a fair recovery in this sector.

There is a need for further measures to enable the sector to generate more employment.

  • Rs. 18,000 Crores will be provided over the budget estimates   for 2020-21 for Prime Minister Awaas Yojana- Urban  through additional allocation and more budgetary resources.
  • This has been over and Rs,8000 crores already this year.
  • This will help 12 lakhs houses to be grounded and 18 lakh to be completed.
  • Expected additional jobs- 78 Lakhs, steel-25LMT, Cement 131LMT.

 

5. Support provided for Construction & Infrastructure Relaxation of Earnest Money Deposit (EMD) & Performance Security on Government Tenders.

  • Performance Security on contracts to be reduced  to 3% instead of 5% to 10%.

      a. this will be extended to ongoing contracts which are free of disputes.

      b. Will also be extended to Public Sector Enterprises.

      c. State will be encourage to do the same

  • Relaxations will be given till 31.12.21 under General financial Rules.
  • Earnest Money Deposit will not be required to tenders and will be replaced by Bid Security Declaration.
  • Contractors will be given relaxation by reducing locking up of capital and cost of BG.

 

6.  Demand Booster for Residential Real Estate Income Tax relief for Developers & Home Buyers.

  • Due to Economic Slowdown there is decline in prices of residential unit.
  • Section 43CA  of Income Tax Act, restricts difference between circle rate & agreement value @ 10%. It is expected to be lower than this.
  • The necessary amendment of IT Act would be proposed in due course.
  • Decided to increase the difference from 10% to 20% under section 43CA for the period from the date of the announcements to 30th June 2021 for only primary sale of residential units of value upto Rs. 2crores.
  • Relief upto 12% shall also be allowed to buyers of these units  under section 56(2)(x) of the IT Act for the said period.
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