Year-ender 2020: Government's steps to revive COVID-hit economy

The year is about to end and it's a perfect time to have a look on the steps that the government has taken so far to control and revive the economy when the global economy including India was hit by COVID-19 pandemic.'

The pandemic led the governments' across the world to enforce lockdowns in their respective countries, which harmed their economies. To lessen the harsh impact of the lockdown on the economy and to support people who were left jobless, the governments' announced for stimulus packages.

Responding swiftly to the situation, Prime Minister Narendra Modi-led NDA government also announced packages worth Rs 29.87 lakh crore, nearly 15 per cent of India's GDP, in form of Atmanirbhar Bharat Scheme among others. It also announced certain measures to make sure that food grains reach to every poor and small business can restart as soon as the lockdowns are lifted gradually through Pradhan Mantri Garib Kalyan Package.

After the announcement by Prime Minister Modi, Union Finance Minister Nirmala Sitharaman presented the details of Atmanirbhar Bharat 1.0 worth Rs 20.97 lakh crore in a series of press conferences from May 13-17. This presentation was followed by Aatmanirbhar Bharat Package 2.0 on October 12, 2020, and the third tranche on November 12, 2020.

The government also supported people through RBI who were not able to pay the EMIs for their loans to the bank by announcing Moratorium initially for three months, which was later extended by another three months.

Pradhan Mantri Garib Kalyan Package

The Centre, along with the RBI, has announced several packages to soothe the effect of COVID-19 crisis. After the COVID-19 induced lockdowns, the Centre had announced Pradhan Mantri Garib Kalyan Package (PM GKP) worth Rs 1.70 lakh crore. Pradhan Mantri Garib Kalyan Package was the first in the series of packages that was announced by the government. Under the package, the government provided free food grains and cash payment to women and poor, senior citizens and farmers. The implementation of the package is being monitored by central and state governments. Under the package more than 42 crore people have received financial assistance of Rs 65,454 crore, the government said in June.

Under the PM Garib Kalyan Yojana, the government paid 12 per cent of employer and 12 per cent of employee contribution into the EPF accounts of eligible establishments for the months of March, April and May and it was continued for three more months (June, July and August). This was estimated to provide liquidity relief of Rs 2,500 crore to businesses and workers. Also, statutory PF contribution of both the employer and employee were reduced from 12 per cent to 10 per cent each for all establishments covered by EPFO.

A special scheme was launched to facilitate easy access to credit for street vendors. Under this scheme, bank credit was provided to each vendor for initial working capital of up to Rs 10,000. This was estimated to generate liquidity of Rs 5,000 crore.

Atmanirbhar Bharat Scheme Package 1.0

The economic package worth nearly Rs 20 lakh crore, 10 per cent of India's GDP, was announced on May 12, 2020. It included liquidity measures worth Rs 8 lakh crore announced by the RBI, the economic package worth Rs 1.70 lakh crore announced by the Finance Minister on March 26, 2020. It also included the borrowing limit for the state government, which was increased from 3% of state GDP to 5% for extra spending.

The economic package consisted of a mix of reforms, infrastructure building, support to stressed businesses and a certain amount of direct cash support. It also included the 'collateral-free loans' to support MSMEs to resume business activity and safeguard jobs. It also changed the FDI policy, provident fund contribution and ease of doing business measures. It also included plans to privatise public sector enterprises, except the ones which were functioning in certain strategic sectors.

Atmanirbhar Bharat Scheme Package 2.0

The second Atmanirbhar Package was announced on October 12, 2020, in form of another stimulus package, ahead of the festive season to boost demand in the COVID-19 hit economy. The package includes perks for central government employees to spend more on consumer durables during the festive season and much higher capital expenditure for both the centre and states. It included Rs 73,000 crore in public expenditure, which included:

• Rs 28,000 crore on leave travel concession (LTC) vouchers and encashment by government employees.
• Rs 25,000 crore additional capital spending on infrastructure projects by the Centre in 2020-21.
• Rs 12,000 crore capital investment by states via 50-year interest-free loans from the Centre.
• Rs 8,000 crore on pre-paid special festival advances.

Atmanirbhar Bharat Scheme Package 3.0

In continuation of the government's push to revive the economy, Union Finance Minister Nirmala Sitharaman on November 12, 2020, announced Rs 2.65 lakh crore worth economic stimulus package, termed as Atma Nirbhar Bharat 3.0.

Under the stimulus package, the FM made 12 big announcements and allocated funds and ensured credit guarantees to various sectors, including real estate, rural employment, Covid-19 vaccine research and Atma Nirbhar Bharat Rozgar Yojana.

Of the total announcements worth Rs 2.65 lakh crore, the maximum Rs 1.45 lakh crore was allocated to give a boost to manufacturing under for Atmanirbhar Manufacturing – PLI scheme for 10 champion sectors, followed by Rs 65,000 crore for agriculture (fertiliser subsidy), Rs 18,000 crore for Housing for All under PMAY-U and Rs 10,200 crore for industrial infrastructure, incentives and domestic defence equipment. It also included Rs 10,000 crore towards boost for rural employment, Rs 6,000 crore towards equity infusion in NIIF debt PF to boost infrastructure, Rs 6,000 crore allocated to Atmanirbhar Bharat Rozgar Yojana, Rs 3,000 crore towards boost for project exports and Rs 900 crore as R&D grant for COVID Suraksha i.e. Indian vaccine development

On combining all the three stimulus measures announced by the Centre so far, the entire COVID-19 relief package amounts to Rs 29,87,641 crore, which equals to 15 per cent of India's gross domestic product (GDP).