Second tranche of economic package focuses on migrant workers, small farmers
In relation with the earlier announcement made on May 12, 2020 by the Prime Minister, finance minister Nirmala Sitharaman provides microscopic view explaining sub divisions of ₹20 lakh crore package. It has been strategically designed to provide relief to various divisions of the country. The 1st tranche was announced on May 13, 2020 and on the following day, the 2nd tranche with aid money aggregating to ₹2.46 lakh crore.
Nirmala Sitharaman announcing stimulus:
The 2nd tranche of the cumulative ₹20 lakh crore package mainly focus on extending aid to the migrant workers, small farmers and poor section in the urban regions. With the aim of reviving the economy, 2nd tranche announces supply of free food grain, provision of concessional credit support and new affordable rental housing plan. A significant announcement bringing relief to two of the most vulnerable huge population is fully guaranteed loan for the MSMEs and farm support schemes for the small farmers.
Other major announcement made is the “one nation, one ration card” plan. It binds a quick shift to single ration card across the country. This will promise uninterrupted supply of ration to the poor in spite of their change in place of residence if any. Further, to stimulate investments of ₹70,000 crore, a new Credit Linked Subsidy Scheme, extending some relief in interest has been announced for the middle class section to build houses till March 31, 2021. Lower middle income group for the scheme comprises of individual with an annual income of ₹6 -18 lakh.
Interest subvention support of 2% has been extended on Mudra Shishu loans upto ₹50,000 costing ₹1,500 crores. This scheme is projected to benefit around 30 million people. This extension in scheme will further help in creating jobs and restoring demand for commodities like steel, cement and transportation industry and other incidental and auxiliary sector. Credit guarantee of ₹3 lakh crore for micro, small and medium enterprises (MSME) has been announced under this scheme worth ₹5.94 lakh crore.
Empathizing with Migrants:
Finance minister Nirmala Sitharaman mentions the glimpse of migrant families including their children carrying baggage walking on feet is sorrowful.
The package will provide 2 lakh crore concessional credit for around 25 million farmers. Announcing further, a ₹30,000 crore refinance scheme for the small farmers will be sanctioned by National Bank for Agriculture & Rural Development (NABARD). ₹3,500 crore is budgeted to be spent on 80 million migrants who don’t hold any ration cards, providing 5 kg wheat/ rice per person along with 1 kg chana per family per month for 2 months.
By March 2021, all public distribution system (PDS) ration cards are said to be digitalized, enabling access to ration (out of the total family quota) to every member of the family residing in different part of India. By August 2020, 670 million beneficiaries making 83% of the PDS will enjoy national portability. Government along with private players will come together to provide new affordable rental housing to the migrant workers.
Other Benefits of this scheme:
Announcements made in the 2nd tranche will not have much impact on the fiscal deficit. It will only be ₹11,000 crore. This will bring the aggregate cost of add on incentives given to ₹66,500 crore, that is 0.34% of GDP. Migrants returning to their rural home towns are being precisely monitored and are being registered under the National Rural Employment Guarantee Act (NREGA).
The scheme has generated a total of 146.2 million man days of work, which is nearly 40% in excess in comparison to the same period in 2019. Further, emphasis on the steps undertaken to make amendments in labor laws and measures are taken to extend social security for the workers employed in unorganized sector.
Announcing ahead, the Government within a span of a month is about to launch a special scheme. The scheme will enable easy access of loan facility to street vendors. Under this scheme, they will be provided with an initial working capital of ₹10,000 or less per person. The above mentioned scheme is said to have a ₹5,000 crore budget.
Under supervision of State and UT Government:
Industry is showing a positive response towards the measures announced. Schemes are to be implemented under supervision of Governments of the respective state and Union Territory. It has been witnessed several times in the past that targeting the beneficiaries is the most difficult task and proper planning and proper implementation. If followed by proper execution, it can only lead to success of the government’s vision of revival of the economy.