The government on Thursday announced a Rs 1.7 lakh crore stimulus that included free foodgrain and cooking gas to poor for three months, and cash doles to women and poor senior citizens as it looked to ease the economic impact of the nationwide lockdown.
While over 80 crore poor people will each get 5 kg of wheator rice and one kg of preferred pulses free of cost every month for the nextthree months, 20.4 crore women having Jan Dhan bank accounts would get one-timecash help of Rs 1,500 spread over three months.
Over 8.3 crore poor women, who were handed out free cookinggas connections since 2016, will get free LPG refills for the next threemonths, while poor senior citizens, widows and disabled will get an ex-gratiacash of Rs 1,000.
“Since the lockdown has been in force (since Wednesday)and therefore we have come out with a package which will immediately take careof the concerns and welfare of poor and suffering workers and those who needimmediate help,” Finance Minister Nirmala Sitharaman said at a newsconference here.
The package, she said, is being announced within 36 hours ofthe 21-day nationwide lockdown announced by the Prime Minister to protect thenation’s 130 crore people from the fast-spreading coronavirus. “We do notwant anyone to remain hungry.”
She hinted at more announcements if a need arises.
“So, today’s measures are very clearly aimed atreaching out with food and money that they need to have it in their hands. Wewill obviously think about other things. I will gradually address if there ismore to attend,” she said.
The package included advancing the payment of one-third ofthe Rs 6,000 a year pre-2019 general election cash dole scheme for farmers,government contributions to retirement funds for the next three months of smallcompanies with 90 per cent of staff earning less than Rs 15,000, and a Rs 50lakh insurance cover to healthcare workers.
For rural workers, the daily wage under the MNREGAemployment guarantee programme has been increased to Rs 202 from Rs 182,benefiting 5 crore workers of about Rs 2,000 in all.
India joins countries — from the US to Singapore — thathave pledged spending to contain the economic fallout of the pandemic that hasinfected almost 5 lakh people globally and left over 21,000 dead.
While the free food grains and pulses would cost Rs 45,000crore, Rs 2,000 payment to 8.7 crore farmers under Pradhan Mantri Garib KalyanYojana will cost Rs 16,000 crore. The cash to women Jan Dhan account holderswill cost Rs 31,000 crore and another Rs 13,000 crore is estimated to be theexpenditure for providing free cooking gas.
Sitharaman, however, evaded a reply to questions on how thegovernment will finance the package given that the impact of the closure ofbusinesses across the country will be felt over the next few months and wouldhave a direct bearing on already strained tax collections.
She also did not say if the government will relax budgetdeficit targets or resort to additional borrowings to fund the programme.
The revised fiscal deficit – the gap between revenue andexpenditure – has been put at 3.8 per cent of the GDP in the current fiscal.For the fiscal starting April, the government is targeting a 3.5 per centfiscal deficit.
“Today’s measures are very clearly aimed at reachingout to the poor,” she said. “At this stage, I am more concerned aboutreaching out to those who need help.”
With businesses closed during the lockdown, the governmentwill contribute employees as well as employer’s contribution to the providentfund for the next three months of companies with up to 100 employees with 90per cent earning not more than Rs 15,000. The contribution will be a total of24 per cent of eligible wages.
Also, workers will be allowed to draw a non-refundableadvance of 75 per cent from credit in provident fund account or three monthssalary, whichever is lower, she said.
Sitharaman said the limit of collateral-free loans to 63lakh women self-help groups is being doubled to Rs 20 lakh, impacting 7 crorehouseholds.
The free foodgrain and pulses are over-and-above theexisting entitlement through the public distribution system (PDS). The rationcard holders can take the foodgrain and pulses from the PDS in twoinstallments, she added.
The government had previously relaxed timelines for meetingtax and other statutory filing requirements as well as allowed companies todivert their philanthropy or CSR funds to support the fight againstcoronavirus.
These measures and the ones announced on Thursday will betopped up by the expected announcement of interest rate cuts by the ReserveBank of India (RBI) at its bi-monthly monetary policy review meet slated nextweek.Commenting on the package, Anil Talreja,Partner, Deloitte India said the announcements are expected to give reprieve tothe mass sections of the population. “This is a good way to ensure thatthe poor and needy get what they deserve. It has ensured that the farmers, poorsenior citizens, widows and specified sections of the society as well as peoplewho are attached to the healthcare sectors get rewarded for their hard work andsacrifices”.