Union Finance Minister Nirmala Sitharaman on Thursday announced a collateral-free loan scheme for 26 sectors that were earmarked as “stressed” by the Reserve Bank of India-constituted KV Kamath committee in September. Under the newly-announced Emergency Credit Line Guarantee Scheme 2.0, companies with outstanding dues of up to Rs 500 crore will be eligible to avail for collateral-free loans worth 20% of their dues.
The additional loan will be available for a tenor of five years and will include an interest moratorium of one year. In addition to the 26 sectors named by the Kamath committee, companies in the health sector will also be eligible for this scheme. The move is expected to aid sectors like aviation, tourism, and hospitality, which have suffered the most due to the coronavirus-induced lockdown.
In another announcement, Sitharaman also extended the earlier announced collateral-free loan scheme, which was aimed at small and medium-sized businesses, till March 31, 2021. The scheme was earlier scheduled to expire in October-end.
Atma Nirbhar Bharat Rozgaar Yojana
The finance minister also announced the Atma Nirbhar Bharat Rozgaar Yojana to expand the net of the organised sector and provide relief to low-salaried individuals who are registered with the Employees’ Provident Fund Organisation.
Under this scheme, the Union government will bear the 12% contribution towards provident fund of both the employer and the employee in establishments with less than 1,000 employees for the next two years. In case of companies with more than 1,000 employees, the government will contribute only for the employees’ part. However, this scheme will be applicable only for individuals who:
- Are newly-employed on or after October 1 on salaries less than Rs 15,000, or,
- Were employed on salaries of less than Rs 15,000 and lost their jobs between March 1, 2020 to September 30, 2020.
Real estate sector
In a bid to provide boost to the sluggish real estate sector, the finance minister said that the difference between circle rate and agreement value for houses will be raised to 20% from the existing 10%.
Circle rate is the minimum price at which a real estate property can be sold, whereas agreement value is the price at which the transaction takes place.
The government also announced an additional allocation of Rs 18,000 crore under the PM Awas Yojana - Urban.
The finance minister made a slew of other announcements regarding allocation of funds. Here are the highlights:
- Rs 65,000 crore allocation for fertiliser subsidies
- Rs 10,000 crore allocation for the PM Garib Kalyan Rozgar Yojana, which can also be used for Mahatma Gandhi National Rural Employment Guarantee Scheme
- Rs 6,000 crore allocation for the National Infrastructure & Investment Fund. Private equity participation has also been allowed under the fund now
- Release of Rs 3,000 crore for EXIM Bank
Sitharaman also asserted that the economy is picking up pace, citing an uptick in indicators like bank credits, equity markets, foreign portfolio investment, energy consumption, and Goods and Services Tax collection.
She also highlighted ratings agency Moody’s revision of Gross Domestic Product estimates for India. On Thursday, Moody’s said India’s GDP growth will come at (-)8.9% in the current financial year, as compared to its earlier estimate of (-)9.6%.
The finance minister also detailed upon the progress in earlier announcements made under the government’s flagship Atma Nirbhar Bharat Yojana. She said that under the collateral-free loan scheme introduced by the government for the small and medium-sized businesses, Rs 2.05 lakh crore has been sanctioned to 61 lakh borrowers.
The announcements came a day after the Cabinet approved a proposal to provide production-linked incentives of nearly Rs 2 lakh crore over a five year period to create jobs and boost manufacturing in the country. Sitharaman had said that the scheme has been designed in a way to ensure that “critical sunrise sectors” get the necessary support from the government to help India become self-reliant. On October 12, Sitharaman had announced LTC cash vouchers and special festival advance schemes for government employees to boost demand.
Meanwhile, the Reserve Bank of India, in its bulletin on Wednesday, said India’s economy is likely to enter a recessionary phase for the first time ever in second quarter (July-September) of the current financial year, with the gross domestic product expected to contract by 8.6%. Besides the contraction in economy, the central bank also flagged the downside risk of high inflation in the coming months and risks to global growth from a second wave of coronavirus infections.