The government announced on Monday a 6.28 lakh crore economic stimulus and relief package to enhance health care facilities, especially children’s ones, providing small businesses, including those in the tourism, farming and export sectors, low-cost credit and incentivising foreign tourists with temporary visa waiver. This is the government’s 4th such package to provide relief for individuals and businesses and boost the economy following the Covid-19 pandemic since last year.
Announcing the relief package , Finance minister Nirmala Sitharaman said: “Today we announce some relief measures. There are eight such measures being announced under the category of relief; four of which are absolutely new. There is one item which is specific to health infrastructure…”
As the second wave of the Covid-19 pandemic fades, states are loosening restrictions on movement and activities, prompting the announcement of the stimulus measures. The Indian economy is picking up speed, with the Nomura India Business Resumption Index (NIBRI) rising for the fifth week in a row to 86.7 for the week ending June 27 from 80.7 the week before. The most recent NIBRI value is 88.4, which is the highest since the week ending April 11th. As a result of the re-imposition of lockdown restrictions in most parts of the country, the NIBRI fell sharply from these levels to just 60.3 in the week ending May 23.
Nonetheless, the economy is expected to be affected by the second wave, necessitating relief and stimulus measures. S&P, a global rating agency, lowered India’s GDP growth forecast for the current fiscal year to 9.5 percent on Friday, down from 11 percent in March, just before the second wave.
Sitharaman increased the Emergency Credit Line Guarantee Scheme (ECLGS) total corpus from 3 lakh crore to 4.5 lakh crore on Monday. The $3 billion ECLGS was one of the key components of the $20 billion economic stimulus package announced in May, which provided additional working capital finance to small businesses in the form of an easy term loan.
She announced a new 1.1 lakh crore loan guarantee scheme for Covid-affected sectors, with 50,000 crore dedicated to improving health infrastructure in non-metropolitan cities at a maximum interest rate of 7.95 percent, compared to 10-11 percent currently. She said the remaining 60,000 crore fund will be used for other sectors, with an interest rate of 8.25 percent per annum.
She added that the corpus would provide loans to both tourism companies and recognised tourist guides. On the request of the tourism industry, the government has granted 5 lakh tourists free tourist visas until March 31, 2022. Tourism, a major source of revenue, has been severely harmed as a result of the disaster.
