NREGA outlay, cap on state borrowing hiked in fifth round

nNEW 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

FISCAL

2.3% of GDP in Paycheck Protection Program and

Healthcare Enhancement Act

11% of GDP in CARES Act

Another in Families First Coronavirus Response Act and supplemental budgetary allocation made thereafter

2.5% of GDP in fiscal measures

Of which 1.2% of GDP measures already being implemented Additional measures such as announcement of local bonds worth 1.3% of GDP

Emergency economic package of 21.1% of GDP. In this, 16% aimed at protecting employment and business

Supplementary budget of 4.9% of GDP focusing on providing short-term work and preserve jobs Using government guarantees to increase credit volume by at least 23% of GDP

State government packages over and above this 6.4% of GDP

Includes food security, direct cash transfer, money for rural job guarantee scheme, and credit guarantee to MSMES

(~12,95,450 crore)

Rate cut by 150 bps in March

Facilities to ensure flow of credit 3.2% of GDP in liquidity infusion

1.7% of GDP in re-lending and rediscounting facilities

Rate cuts in the range of 10-150 bps

Host of measures including liquidity provision by increase in size and frequency of Japanese government bonds and concessional loan facilities for small businesses

Additional asset purchases

Extension of ECB norms which inlcude prohibiting banks from paying dividends for FY 2019 and 2020 and/or buying back shares. Conserved capital to be used to support households, small businesses and other borrowers Payment moratorium on consumer loans established before March 15th is granted until June 30th

3.9% of GDP

Policy rates cut and other measures to boost liquidity

(~ 8,01,603 crore)