Here is a short overview of 20 lakh crore economic relief package introduced by the government of India under Aatmanirbhar Bharat to revive the economy from the effects of COVID-19.
2. INTRODUCTION:
โข On 12th May 2020 Prime Minister Narendra Modi, announced a 20 lakh crore package.
โข It was announced under Aatmanirbhar Bharat.
โข The package is equivalent to 10% of Indiaโs GDP.
โข The economic relief package was undertaken by the government in 5 tranches.
โข The overall package stood at Rs. 20,97,053 crore.
โข The government has combined the fiscal and the monetary policies in the 20 lakh crore package
3.
4. VISION:
โข The objective of the Indian government behind announcing Rs. 20 lakh crore package is to jump start
the economy after the setback that it has faced due to the COVID-19 pandemic.
โข RBI is taking initiatives to bring liquidity in the economy.
โข Reforms for MSME will help them to come out, start fresh and develop.
โข Job creation will help to motivate the youth of the country.
โข Other initiatives like โVocal for Localโ and โOne nation one ration cardโ is taken to become Self-Reliant.
5. Measures taken by RBI:
โข Cutting down of repo rate.
โข Earlier the repo rate was 5.15% and now it has been reduced to 4.4%.
โข Cutting down the reverse repo rate.
โข Earlier the reverse repo rate was 4% but now it has been reduced to 3.35%.
โข RBI also announced that lenders could give a moratorium of 3 months on term loans, outstanding as
on 1 March, 2020.
โข There was also a reduction of 1% in cash reserve ratio.
6. Measures announced by PM:
โข Prime Minister Narendra Modi announced a Rs. 1.92 lakh crore package
โข Under this Rs. 500 was given to almost 20 crore women holding Jan Dhan account.
โข LPG cylinders were made available free of cost to almost 8 crore poor people for 3 months.
โข Rs. 1,000 was given to poor senior citizens to fight the tough times.
โข Along with all these measures, various health insurance benefits were also provided to health workers.
7. First tranche for MSME sector:
โข The government has announced Rs. 5,94,550 crore for this sector in order to ensure liquidity.
โข It includes Rs 3 lakh crore collateral-free loans and Rs 50,000 crore equity infusions for MSMEs through
Fund of Funds.
โข Liquidity relief measures worth Rs 30,000 crore were also announced for NBFCs, HFCs etc. and Rs
90,000 crore for power distribution companies.
โข Government took these measures to revive the MSME sector and help the entrepreneurs to regain
their capacity and start their business again.
โข PM has also put up the importance of becoming โVocal for Localโ in order to grow.
9. Second tranche for migrant workers:
โข The package announced for second tranche was of Rs. 3,10,000 crore.
โข The government introduced โone nation one ration cardโ to allow migrant workers to buy ration from
any depot in the country.
โข A special credit facility of Rs 5,000 crore was announced to support around 50 lakh street vendors who
will have access to an initial Rs 10,000 working capital.
โข The government also announced that close to Rs 2 lakh crore will be given to farmers through Kisan
credit cards while 2.5 crore farmers, including fishermen and animal husbandry farmers, would be able
to get institutional credit at a concessional rate.
11. Third tranche for agriculture and allied sector:
โข The package of Rs. 1,50,000 crore was announced.
โข The focus of the government was on agriculture and allied sector including dairy, animal husbandry
and fisheries.
โข The government has announced Rs 1 lakh crore agriculture infrastructures like post-harvest
management infrastructure.
โข Other key announcements made by the government included
o Rs. 20,000 โ fishermen
o Rs. 10,000 crore - Micro food enterprises.
o Rs. 4,000 crore - Herbal cultivation,
o Rs. 15,000 crore - Animal Husbandry Infrastructure Development Fund
o Rs. 500 crore - Bee-keeping
12.
13. Fourth and the fifth tranche for other sectors and job
creation:
โข The final tranche of relief package was announced for sectors including coal, minerals, defense production,
air space management, airports etc.
โข The package of Rs. 48,100 crore was announced.
โข The government announced easing utilization of the Indian air space to reduce air travel cost.
โข It was also announced that the commercial mining in the coal sector and privatizing discoms in metros to
streamline their functions for better accountability.
โข The government also allocated an additional Rs 40,000 crore for the Mahatma Gandhi National Rural
Employment Guarantee Act (MGNREGA) for job creation in India.
14.
15. Impact of the package:
โข The 20 lakh crore package that has been introduced by the Indian government as an economic relief
package, will have a positive effect on the economy and will help many sectors to come out of the
recession that they had due to the lockdown in response to global pandemic.
โข The RBI has increased the liquidity in the market.
โข The PMGP announced by the government will help the poor people in the country to sustain their life.
โข Measures like โVocal for Localโ and โone nation one ration cardโ will also help the country to grow from the
inside.
โข The country will become strong if the MSME sector develops.
โข The agriculture and other sectors will also get the benefit of the package.
โข Job creation is also one of the major steps taken by the government.