FM announces Aatmanirbhar Bharat 3.0 Stimulus

FM announces Aatmanirbhar Bharat 3.0 Stimulus

On 12th November 2020, Union Finance Minister Smt. Nirmala Sitharaman announced 12 key measures, as part of Government of India’s stimulus to the Indian economy, under Aatmanirbhar Bharat 3.0 stimulus. The net stimulus announced today amounts to ₹ 2.65 Lakh crore. She also informed that the total stimulus announced by the Government and Reserve Bank of India till date, to help the nation tide over the COVID-19 pandemic, works out to ₹ 29.87 lakh crore, which is 15% of national GDP. Out of this, stimulus worth 9% of GDP has been provided by the government. 

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Aatmanirbhar Bharat 3.0 Stimulus: Key Points:

Key takeaways from Finance Minister’s Aatmanirbhar Bharat 3.0 stimulus package include:

1) Aatma Nirbhar Bharat Rozgar Yojana

A new scheme is being launched to incentivize job creation during COVID-19 recovery. If EPFO-registered establishments take in new employees without EPFO numbers or those who lost jobs earlier, the Yojana will benefit these employees. The scheme will be effective from October 1, 2020. Beneficiaries / New Employees under the scheme would be:

  • any new employee joining employment in EPFO registered establishments on monthly wages less than Rs.15,000
  • EPF members drawing monthly wage of less than Rs.15,000 who made exit from employment during COVID Pandemic from 01.03.2020 to 30.09.2020 and is employed on or after 01.10.2020.

Central Govt. will provide subsidy for two years in respect of new eligible employees engaged on or after 01.10.2020 at following scale:

  • Establishments employing up to 1000 employees: Employee’s contributions (12% of Wages) & Employer’s contributions (12% of wages) totalling 24% of wages
  • Establishments employing more than 1000 employees: Only Employee’s EPF contributions (12% of EPF wages)

The scheme will be effective from October 1, 2020 and operational till 30th June 2021. Certain other eligibility criteria would have to be met, and Central Government will provide subsidy for two years in respect of new eligible employees.

2) Emergency Credit Line Guarantee Scheme

Emergency Credit Line Guarantee Scheme for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021. Credit guarantee support scheme is being launched for Healthcare sector and 26 sectors stressed due to COVID-19.

Entities will get additional credit up to 20% of outstanding credit with a tenor of five years, including 1 year moratorium on principal repayment. This scheme will be available till 31.3.2021.

3) Production Linked Incentive worth ₹ 1.46 Lakh Crore is being offered to 10 champion sectors.

This will help boost competitiveness of domestic manufacturing. Will give a big boost to economy, investment, exports and job creation. A total amount of nearly 1.5 Lakh Crore has been earmarked across sectors, for next five years.

The ten sectors are – Advance Cell Chemistry Battery, Electronic/Technology Products, Automobiles & Auto Components, Pharmaceuticals Drugs, Telecom & Networking Products, Textile Products, Food Products, High Efficiency Solar PV Modules, White Goods (ACs & LED), and Specialty Steel.

4) ₹ 18,000 Crore Additional outlay for PM Awaas Yojana – Urban

This is over and above Rs. 8000 Crore already allocated this year; will help ground 12 Lakh houses and complete 18 Lakh houses; will create additional 78 Lakh jobs and improve production and sale of steel and cement, resulting in multiplier effect on economy.

5) Support for Construction & Infrastructure – Relaxation of Earnest Deposit Money & Performance Security on Government Tenders

To provide ease of doing business and relief to contractors whose money otherwise remains locked up, performance security on contracts will be reduced to 3%. EMD for tenders will be replaced by bid security self-declaration. The relaxations will be till December 31, 2021.

6) Income Tax relief for Developers & Home Buyers

Differential between circle rate and agreement value in real estate income tax is being increased from 10% to 20%. This is for primary sale of residential units up to ₹ 2 Crore (from date of announcement of this scheme, till June 30 2021).  The Income Tax relief provides incentive to middle class to buy homes.

7) Platform for Infra Debt Financing

Govt. will make ₹ 6,000 Crore equity investment in debt platform of National Investment and Infrastructure Fund, which will help NIIF raise ₹ 1.10 Lakh Crore by 2025 for financing infrastructure projects.

8) Support for Agriculture: ₹ 65,000 Crore for subsidized fertilizers

As fertilizer consumption is going up significantly, ₹65,000 Crore is being provided to ensure increased supply of fertilizers to farmers to enable timely availability of fertilisers in the upcoming crop season.

9) Boost for Rural Employment:

Additional outlay of ₹ 10,000 Crore is being provided for PM Garib Kalyan Rozgar Yojana. Funds can be used for MGNREGA or for Gram Sadak Yojana, this will help accelerate rural economy .

10) Boost for Project Exports

₹ 3,000 Crore boost to be given for project exports through assistance given by India to developing countries under Indian Development and Economic Assistance Scheme (IDEAS Scheme). This will help EXIM Bank facilitate these Line of Credit development assistance activities and promote exports from India.

11) Capital and Industrial Stimulus

₹ 10,200 Crore additional budget stimulus will be provided for capital and industrial expenditure on defence equipment, industrial infrastructure and green energy.

12) R&D grant for COVID Vaccine

₹ 900 Crore is being provided to Department of Biotechnology for research activities related to COVID-19 vaccine development. This does not include cost of vaccine or logistics for vaccine distribution (whatever is required for that will be provided).

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