Atmanirbhar Bharat 3.0: FM Sitharaman announces relief for stressed sectors, ECLGS 2.0

“Making a few announcements which may be considered as the next set of stimulus measures,” Finance Minister Nirmala Sitharaman said while addressing the media.

FM Sitharaman added that there would be a total of 12 announcements to be made as a part of Atmanirbhar Bharat 3.0. Here is what has been announced so far:

>> First of this is the Atmanirbhar Bharat Rozgar Yojana.

This new scheme is being launched to incentivise creation of new employment opportunities. EPFO registered organisations who employ new employees with no previous EPFO account or if they re-employ those who lost their jobs between March 1 and September 30, 2020 will be benefitted. Salary of the newly employed or re-employed should not exceed Rs 15,000/month.

The scheme will be effective from October 1, 2020 to be operational till June 30, 2021.

Eligibility criteria: Establishments registered with EPFO which employ a minimum of two new employees against an employee base of 50 or less; and minimum five new employees if staff strength is 50 employees or more.

Benefits: Centre will provide subsidy for two years in respect of new eligible employees engaged after October 1, 2020.

Here, for establishments employing up to 1,000 employees the employees’ contribution and employer’s contribution of totalling 24 percent (12 percent each) will be covered. And for establishments employing more than 1,000 staff, only employees’ 12 percent EPF contribution will be covered.

“Those employing 1,000 or less would be covered by this scheme and 65 percent of all in the formal sector,” Sitharaman pointed out.

>> Emergency Credit Line Guarantee Scheme (ECLGS) – scheme 1.0 extended and 2.0 launched

The ECLGS has been extended till March 31, 2021, with no changes to the original scheme.

Further, the Centre is launching credit guarantee support for 26 stressed sectors as per the Kamath panel report, plus healthcare sector, with credit outstanding of Rs 50 crore to Rs 500 crore.

Original ECLGS had one year of moratorium and four year repayment. Under the new scheme entities will get additional credit up to 20 percent of outstanding credit, with a one-year moratorium and five-year repayment period. There will be no upper ceiling on annual turnover. The new scheme will be dovetailed with the current ECLGS extension up to March 31, 2021.

>> Boost for Atmanirbhar Bharat production linked incentives (PLI) scheme for 10 “champion sectors”

Centre already approved PLI schemes for three sectors at cost of Rs 51,355 crore for – manufacturing and specified electronics components at cost of Rs 40,995 crore; critical key starting materials (KSM), drug intermediates and active pharmaceutical ingredients (API) at cost of Rs 6,940 crore; and manufacturing and medical devices at a cost of Rs 3,420 crore.

Now, 10 more “champion sectors will be covered under the PLI scheme to boost competitiveness of domestic manufacturing. This is expected to give a significant boost to economic growth and domestic employment.

Here, a total amount of nearly 1.5 lakh crore has been earmarked across sectors, for next five years. The sectors are: advance cell chemistry battery (Rs 18,100 crore), electronic/technology products (Rs 5,000 crore), automobiles and auto components (Rs 57,042 crore), pharmaceutical drugs (Rs 15,000 crore), telecom and networking products (Rs 12,195 crore), textile products (Rs 10,683 crore), food products (Rs 10,900 crore), high efficiency solar PV modules (Rs 4,500 crore), white goods (ACs and LED) (Rs 6,238 crore), and specialty steel (Rs 6,322 crore)

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When the finance minister's press conference was announced, it was expected that the Centre will likely announce another stimulus package amid the COVID-19 pandemic. Sitharaman confirmed this right off the bat.

“Making a few announcements which may be considered as the next set of stimulus measures,” the finance minister said when addressing the media.

She further spoke on the economy, saying there is “strong recovery.”

“Quite a few indicators showing distinct recovery in the economy. Bank credit growth is up 5..1 percent and markets are at a record high. Forex reserves are like never before. The Reserve Bank of India (RBI) will now come out with a monthly report showing a strong growth,” she said.

Sitharaman added that “we could be back to positive growth” as seen in the third quarter itself, adding that “government is maintaining an unrelenting reform pitch.”