Covid-19 Relief Package

News: The government has announced some fresh relief measures for the economy, the first such package after the second COVID-19 wave.

Details:

  • Extending loan guarantees and concessional credit for pandemic-hit sectors and investments to ramp up healthcare capacities.
  • Financial implications of ₹6,28,993 crore, representing about 3% of GDP.
  • Expansion of the existing Emergency Credit Line Guarantee Scheme by ₹1.5 lakh crore.
  • A new ₹7,500 crore scheme for loans up to ₹1.25 lakh to small borrowers through micro-finance institutions.
  • A fresh loan guarantee facility of ₹1.1 lakh crore for healthcare investments in non-metropolitan areas and sectors such as tourism.
  • A separate ₹23,220 crore has been allocated for public health with a focus on paediatric care, which will also be utilised for increasing ICU beds, oxygen supply and augmenting medical care professionals for the short term by recruiting final year students and interns.
  • Indirect support for exports worth ₹1.21 lakh crore over the next five years.
  • Free one-month visas for five lakh tourists.
  • A new seed varieties for farmers.

Benefits:

  • The measures to keep enterprises afloat in the aftermath of COVID 2.0. The extension of ECLGS’s scope and coverage are expected to provide significant support to the cash flow of the stressed sectors.
  • Tourism had been one of the most impacted sectors and the package would usher in much-needed liquidity and help revive the employment-intensive sector.
  • The pinpoint focus on augmenting manpower and infrastructural resources for pediatric care is a welcome step and a new beginning.

Way forward:

  • Experts believe that these measures would not tackle low demand, low GDP, high inflation and unemployment.
  • Ours is not an export-driven economy but a consumption-driven economy. Nearly 55% of our GDP is made up of consumption. And for consumption to go up, we need to put money in the hands of the people.
  • Therefore, the need of the hour is to generate new demand and for that to happen, we need to increase consumption. Various sectors of the economy needed “hand holding and not expansion of credit”.
  • Various studies have shown that India’s middle class had shrunk by 3.2 crore and about 7.5 crore people were pushed below the poverty line in 2020. This is largely the impact of Pandemic.