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Centre announces mega stimulus package worth Rs 20 lakh crore

Prime Minister Narendra Modi has announced a special economic package to bailout India’s economic crisis due to COVID-19 lockdown on 12 May 2020. The...
Centre makes major announcements to combat COVID-19 pandemic

Centre makes major announcements to combat COVID-19 pandemic

Prime Minister had called for a complete lockdown of the entire nation with effect from 25 March 2020 in an effort to contain the...
Prime Minister Narendra Modi called for a complete lockdown of the entire nation for 21 days with effect from 25 March 2020 in an effort to contain the COVID-19 pandemic. The move will impact several sectors including tourism, construction, hospitality and daily life engagements including the informal sector. The impact will also be seen in a big way on the economy growth. In a move to help various sectors the Centre made major announcements and relief packages for various sectors. In a move to strengthen the Healthcare sector, the Central government announced a provision of Rs 15,000 crore for treating Coronavirus patients and strengthening medical infrastructure of the country. The funding will be utilised for ramping up the number of testing facilities, personal protective equipment (PPE), isolation beds, ICU beds, ventilators and other essential equipment. Simultaneously, training of medical and paramedical manpower will also be undertaken. PM also announced the creation of COVID-19 Economic Response Task Force under the Union Finance Minister. The Task Force will consult stakeholders, take feedback on the basis of which decisions will be taken to meet the challenges. The Task Force will also ensure implementation of the decisions taken to meet these challenges. Following the major announcement by the Prime Minister, within 36 hours, the Union Finance and Corporate Affairs Minister Nirmala Sitharaman announced a relief package worth Rs 1.70 lakh crore under Pradhan Mantri Garib Kalyan Yojana. The package is for doctors, medical health care service providers, migrant workers, urban and rural poor. Under the Pradhan Mantri Garib Kalyan Package, insurance scheme has been introduced for health workers in government hospitals and health care centres. Doctors, ward-boys, nurses, ASHA workers, paramedics, technicians, doctors and specialists and other health workers will be provided a special insurance coverage of Rs 50 lakh per person. Around 22 lakh health workers will be provided insurance cover. All government health centres, wellness centres and hospitals of the Centre and states will be covered under the scheme. Under the newly-launched Pradhan Mantri Garib Kalyan Anna Yojna, 80 crore people will get additional five kg of wheat or rice each month for the next three months for free of cost above the five kg which they already are entitled to. Besides, one kg of pulse according to regional preferences for each household will also be given for the next three months. In a move to help out farmers, the first installment of Rs 2,000 due in 2020-21 under the Pradhan Mantri Kisan Samman Nidhi or PM Kishan Scheme will be transferred to the accounts of 8.7 crore farmers in April 2020. The scheme provides Rs 6,000 per year. Apart from this, a total of 20.40 crore PMJDY women account-holders will be given an ex-gratia of Rs 500 per month for the next three months. About eight crore below poverty level families will be provided free cooking gas cylinders for three months under the Ujjwala Scheme. Moreover, the government will make Employees' Provident Fund (EPF) contribution of 12 percent each for both employers and employees for the next three months for establishments which have up to 100 employees and 90 percent of whom earn a salary below Rs 15,000 per month. To support senior citizens (above 60 years), widows and handicapped, the government announced to give them Rs 1,000 during next three months. The government has also raised regular wages by Rs 20 under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with effect from 1 April 2020. Wage increase under MNREGA will provide an additional Rs 2,000 benefit annually to a worker. This will benefit approximately 13.62 crore families. An announcement was also made for doubling collateral free loans to 63 lakh women self-help groups to Rs 20 lakh from Rs 10 lakh. The government will amend the Employees’ Provident Fund Regulations to allow non-refundable advance of 75 percent from the fund for contingency expenditure or three months of wages, whichever is lower, thus benefitting four crore workers. The Centre will direct state governments to utilise the existing Welfare Fund for Building and Other Constructions Workers to provide assistance to 3.5 crore construction workers to protect them from economic disruption. The state government will also be asked to utilise the funds available under District Mineral Fund (DMF) to augment facilities of medical testing, screening and other requirements. On 27 March 2020, another major announcement was made by the Reserve Bank of India (RBI). The apex bank will be infusing Rs 3.74 lakh crore liquidity into the financial system through various measures. RBI has already injected liquidity of Rs 2.8 lakh crore in financial markets through various instruments, which equal to 1.4 percent of the gross domestic product (GDP). Along with recent liquidity measures equal to 3.2 percent of GDP, RBI will take continuous measures to ensure liquidity in the system. As part of the liquidity infusion measures, the central bank has reduced the Repo Rate by 75 basis points to 4.4 percent and Reverse Repo Rate by 90 basis points to four percent. Besides, the cash reserve ratio (CRR) of all banks has been reduced by 100 basis points to three percent with effect from 28 March 2020 for a period of one year. Moreover, all commercial banks, including regional rural banks, small finance banks and local area banks, co-operative banks, all-India Financial Institutions, and NBFCs, including housing finance companies and micro-finance institutions, lending institutions, are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on 1 March 2020. In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions have been permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on 1 March 2020. The accumulated interest for the period will be paid after expiry of the deferment period. Apart from the mega relief packages for the poor, medical health care service providers and liquidity into the financial system by RBI, other decisions were also taken for various industrial sectors. As a measure to make availability of life- saving health equipment, export of all personal protective equipment including Body Coveralls, N-95 Masks, ventilators, artificial respiratory apparatus, oxygen therapy apparatus, surgical/disposable masks (two third ply) and textile raw material used for masks and coveralls was prohibited from 19 March 2020. The government has also asked distilleries/sugar mills to maximise the manufacture of hand sanitisers. Around 45 distilleries and 564 other manufacturers have been granted permission to manufacture hand sanitisers. More distilleries will be given permission to produce sanitisers. The coal supply was also declared as an essential service and its supply is maintained during the lockdown period, so that power and other critical sectors are unaffected due to the current situation. For the Power sector, CPSU generation/transmission companies will continue supply/ transmission of electricity even to Discoms which have outstanding dues to the generation/transmission companies. The payment security mechanism to be maintained by the distribution companies with the generating companies for dispatch of power will be reduced by 50 percent till 30 June 2020. Also, the Central Electricity Regulatory Commission will provide a moratorium of three months to Discoms to make payments to the generating companies and transmission licensees and not to levy penal rates of late payment surcharge. Also, all renewable energy projects under implementation have been given extension of time, considering the period of lockdown and time required for remobilisation of work force. In another move, the Supreme Court has allowed the sale of BS-IV compliant vehicles for 10 days, except in Delhi-NCR, post the lockdown period. Only 10 percent of the unsold inventory of BS-IV vehicles can be permitted to be sold during the period. The court has asked automobile dealers to submit on affidavit the details of sold and unsold inventories within one week.

Centre announces mega economic package to combat COVID-19 pandemic

Prime Minister Narendra Modi called for a complete lockdown of the entire nation for 21 days with effect from 25 March 2020 in an...
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