Is the financial package a mirage?

Just as the economy was limping back towards normalcy, the second wave of Covid-19 had derailed the process which led to a fresh wave of uncertainty. There has been hue and cry from different sectors. Even the RBI recommended fiscal support. The centre finally announced a fresh package of Rs 6.29 lakh crore.

Together with previously announced Rs 93,869-crore spending on providing free food grains to the poor till November and additional Rs 14,775 crore fertiliser subsidy, the stimulus package, which is mostly made up of government guarantee to banks and microfinance institutions for loans they extend to Covid-hit sectors, totalled up to 6.29 lakh crore.

The Finance Minister provided Rs 23,220 crore of additional funding to set up children and paediatric care at hospitals to prepare healthcare infrastructure to deal with any emergency arising due to COVID-19 wave hitting children.

With the tourism sector being hit hard by the pandemic, the Finance Minister had announced a financial support to over 11,000 registered tourists, guides, travel and tourism stakeholders, in addition to free one-month tourist visa to first five lakh tourists.

But it seems while addressing the problems of tourism sector, the Centre conveniently ignored the travel agencies and tour operators in States. There is strong criticism from the Travel Agents Association of India that the Centre's announcement would benefit only 900 agents who are recognised by the Ministry of Tourism. It left out the real stakeholders of Tourism sector which includes hotels, bus operators etc. Travel agents contribute about 10 per cent of GDP and 90 per cent of business is done by agencies.

Other announcements included an additional Rs 19,041 crore to provide broadband internet cover to all village panchayats, an extension of tenure of a production-linked incentive (PLI) scheme for large-scale electronics manufacturing by a year and 88,000 crore of insurance cover for goods exporters.

The central government's policy assumes that the banks will extend easy loans to the Covid affected sectors since the loans are backed by government guarantee. But this does not seem to be happening. We have seen this trend soon after the first wave was over and even now there are serious apprehensions in the trade sectors that the announcement looks great in terms of figures but at the ground level, it may not be so easy to get the bank loans. Already some firms have closed, and many have lost employment. Urban poor need immediate fiscal support.