Finance Minister Nirmala Sitharaman Thursday announced the second tranche of the coronavirus economic package of Rs 20 lakh crore aimed at migrant workers, small farmers and unorganised sector. Even as the fresh measures raise more hopes, the finer details paint a slightly different picture. Here's a realty check.
ANNOUNCEMENT
Rs 86,600 crore agriculture loan has been availed by farmers in March and April
REALITY: BEHIND TARGET
Nirmala Sitharaman said that the government has sanctioned 63 lakh loans amounting Rs 86,000 crore for farmers between March 1 and April 30, 2020. Even as the loaned amount appears significant, especially in the current scenario, the government is running behind the target as of now. The government has a budget allocation of Rs 15 lakh crore in FY21 towards farm loans, up from 12 lakh crore for last fiscal. It implies a monthly run rate of 1.25 lakh crore. In the two months under review, it should be Rs 2.5 lakh crore. That implies that the Centre's loan disbursal to the agri sector is currently at a run rate of one-third of target for the fiscal - clearly a cause of concern.
ANNOUNCEMENT
Rs 30,000 crore additional funding via NABARD
REALITY: FARMERS ARE BORROWING LESS, NOT MORE
Aiming to benefit 3 crore farmers, mostly small and marginal farmers, the government unveiled Rs 30,000 crore additional emergency working capital funding through the National Bank for Agriculture and Rural Development (NABARD). It is over and above Rs 90,000 crore to be approved by NABARD through normal finance methods to meet post harvest Rabi and current Kharif requirement of farmers in May and June. However, when farmers are already availing lower than planned loans, how effective can this be?
ANNOUNCEMENT
Labour law announcements: National Floor Wage; portability of labour benefits; ESIC for all; re-skilling; social security scheme
REALITY: PRE-ANNOUNCED MEASURE
"We are proposing a national floor-wise wage rate so that uniform wage rate prevails across states," Nirmala Sitharaman said today. She also hinted at the government mulling reducing 44 labour laws into four codes. She also talked about compulsory ESIC coverage via notification by the Central government for employees working in hazardous industries."Re-skilling fund introduced for retrenched employees. So, that the people who lost jobs get employed," finance minister said.
However, most initiatives are part of crashing 40-odd labour laws into four. These are yet to be approved by Parliament. "We hope to pass it after it is passed by all the standing committees," Sitharaman said when asked about the same in the presser.
ANNOUNCEMENT
Rs 11,000 crore SDRF support to feed migrants
REALITY: RE-ALLOCATION OF SDRF FUND
The state governments have been permitted to utilise State Disaster Response Fund (SDRF) to build shelter for migrants and provide them food, water, among other necessities, Sitharaman said. The central government has released Rs 11,000 crore of its contribution in advance to all states on April 3 in order to boost funds in their SDRF, she added. However, the amount will come from the State Disaster Response Fund (SDRF) which already exists. Probably, there is no additional expense and it's just a reallocation.
ANNOUNCEMENT
Extension of credit linked affordable housing subsidy scheme by one year to March 2021; Rs 70,000 crore outlay
REALITY: NO IMMEDIATE IMPACT
The government announced the extension of the deadline for the affordable housing Credit Linked Subsidy Scheme (CLSS) till March 2021 which expired on March 31, 2020. The government expects the move to benefit 2.5 lakh middle income families in FY21 and pump over Rs 70,000 crore as investment in housing and create jobs. However, the announcement may not be able to provide any immediate relief. It will extend over the fiscal and much of which will be wasted in uncertainty and fear of overspending. The maximum benefit that a consumer is expected to get is 3-4 per cent interest subvention. With interest rates already falling, the government's outgo may actually be lower than anticipated.
ANNOUNCEMENT
2 per cent interest subvention on Shishu loans up to Rs 50,000
REALITY: HIGHEST NPAs IN CATEGORY
Sitharaman announced Rs 1,500 crore interest subvention for MUDRA-Shishu loan payees. The subvention will be applicable to MUDRA's Shishu providing loans of upto Rs 50,000 under the Pradhan Mantri Mudra Yojana (PMMY). However, interest subvention has only been extended for another 12 months. This category also has the highest non-performing assets (NPAs) that will have to be borne by the Centre. In a written reply to a question on the PMMY in the Rajya Sabha in December 2019, Minister of State for Finance Anurag Thakur had said: "Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) have reported that as of March 2019, against a total amount of Rs 6.04 lakh crore disbursed by them under PMMY since inception of the scheme, an amount of Rs 17,251.52 crore had turned into Non-Performing Assets (NPAs), which is 2.86 per cent of the total disbursed amount."
ANNOUNCEMENT
Rs 5,000 crore special credit for street vendors who can avail up to Rs 10,000 per head
REALITY: HARD TO LOAN FROM BANKS
The Finance Minister said that the government will provide Rs 5,000 crore special credit facility for street vendors as part of the economic package to counter the coronavirus crisis. However, the future of street vendors is in serious doubt during the current times. Whether they can avail the loans through the bureaucratic banking system in itself raises questions.
ANNOUNCEMENT
Rs 2 lakh crore concessional credit under Kisan Credit Card
REALITY: NO ADDITIONAL ALLOCATION
KCC holders get loans up to Rs 3 lakh at 4 per cent interest. The government intends to add 2.5 crore new farmers including from fishery and animal husbandry to the scheme. Rs 2 lakh crore is overall budgetary allocation for the scheme in FY21. Probably, it's already a part of Rs 15 lakh crore allocation to agriculture.