Fiscal cost less than 11% of package size
Out of nearly ~21 trillion worth of Atmanirbhar Bharat measures announced by the finance ministry and the Reserve Bank of India, the Centre’s fiscal impact will amount to around ~2.28 trillion, or around 10.8 per cent of the total package, Business Standard has learnt from government sources.
This will include tax revenue forgone, outlay towards free food distribution and cash handouts, increase in MGNREGS, interest subvention, increase in viability gap funding for social infrastructure, and initial support from the Centre’s coffers to kickstart some of the liquidity and credit measures announced over the past five days. Not all of this amount will necessarily be borne in fiscal year 202021. A portion of the burden will be funded from the Centre’s Budget over the next two-five fiscal years.
On Sunday, the Finance Minister Nirmala Sitharaman gave the breakup of all Covid-19-related stimulus packages announced. In that, she included the Centre’s health sector package worth ~15,000 crore, and ~8 trillion worth of support from the Reserve Bank. She said the tax concessions announced since March 22 had cost the exchequer ~7,800 crore.
As part of the March 26 package of ~1.7 trillion, the FM announced measures regarding free foodgrain distribution to 800 million, one-time cash transfer to senior citizens, women and divyangs, and free gas cylinders for three months to Ujjwala beneficiaries. All this is expected to cost around ~92,000 crore.
On May 13, the FM announce measures worth ~5.94 trillion, to provide relief to MSMES, taxpayers, NBFCS, power distribution firms, real estate sector, organised sector employees, and contractors. Most of these were on the liquidity and credit side. Analysts differ on the direct fiscal impact of this set, with estimates ranging from ~19,80041,000 crore. A top government official clarified that the outlay from Wednesday’s measures will be around ~35,000 crore, including some initial support from the Centre to boost the liquidity measures announced. These may be spread out over multiple years.
On May 14, the FM’S measures totalled ~3.1 trillion. The direct spending will include ~3,500 crore on providing free foodgrain to 80 million migrants for two months, ~1,500 crore interest subvention on MUDRA loans below ~50,000 crore, and ~5,000 crore on supporting credit-linked subsidy scheme for middle income groups to enable them to buy affordable housing. The last point was not mentioned by Sitharaman.
The May 15’s announcements focused on the rural and agriculture sector and totalled ~1.5 trillion. Around ~35,000 is expected to come from the Centre’s Budget over the next two-five fiscal years on schemes such as formalisation of micro food enterprises, matsaya sampada yojana, promotion of herbal cultivation beekeeping initiatives, and others. Out of May 16’s announcements, which analysts estimate totalled ~63,000 crore, about ~8,100 crore will be towards increased viability gap funding for social infrastructure projects. The FM increased MGNREGA allocation by ~40,000 crore, taking the total outlay for 202021 on the scheme to over ~1 trillion.