NREGA outlay, cap on state borrowing hiked
NEW DELHI: Concluding the government’s five-part policy reform and fiscal incentive package worth a total of ₹20,97,053 crore, finance minister Nirmala Sitharaman on Sunday announced a 66% jump in the allocated budget for the flagship rural job guarantee scheme; a substantial hike in the borrowing limit for states; a new plan that aims to end the monopoly of public sector enterprises (PSEs) and open up sectors for private participation; and substantial ease of compliance for businesses, including relaxations in the insolvency and bankruptcy framework.
The fifth and the final tranche of announcements also included the creation of a robust public health infrastructure covering districts and blocks, launch of a digital education programme and an initiative for mental health and emotional well-being for students, teachers and families.
The FM’s announcement is part of a slew of measures announced by the government for micro, small and medium enterprises (MSMEs), agriculture, migrant workers, defence, businesses, and other segments. This followed Prime Minister Narendra Modi’s announcement of a ₹20 lakh crore package — amounting to 10% of the GDP — for the economy, to overcome the distress caused by the pandemic and the lockdown as well as to build a “self-reliant India”.
The FM said that the government has provided ₹11,02,650 crore stimulus in the five tranches. Earlier, stimulus worth ~9,94,403 crore was infused in the system through fiscal and policy measures that included ₹1.70 lakh crore relief package on May 26 and ₹8,01,603 crore monetary measures by the Reserve Bank of India (RBI) since March 27.
But experts have pointed out that the additional government spending as a part of the package is limited.
DK Srivastava, chief policy adviser at consultancy firm EY India, said, “The final picture of central government’s COVID-related
stimulus package at the conclusion of the fifth tranche of finance minister’s announcement amounts to 9.8% of FY21 GDP. Only about 10% of this stimulus can be traced as direct additional budgetary cost to the central exchequer.
Nearly 5% of the stimulus relates to already budgeted expenditures. The rest of the stimulus primarily pertains to RBI’s liquidity enhancement measures, government’s credit guarantee programmes and insurance schemes.”
The Opposition, too, raised questions about the scale of the package.
“The government’s economic package is only of ₹3.22 lakh crore and is only 1.6% of India’s GDP and is not worth ₹20 lakh crore as announced by the prime minister,” said Congress leader Anand Sharma.