New Delhi, November 12
Finance Minister Nirmala Sitharaman on Thursday said the Indian economy is witnessing a strong recovery after a long and strict lockdown.
Addressing a press conference to announce more stimulus measures to boost growth, she said macro-economic indicators are pointing towards recovery.
COVID-19 active cases have declined from over 10 lakh to 4.89 lakh with case fatality rate (CFR) at 1.47 per cent, she said.
Giving out details of recovery, she said composite purchasing managers index (PMI) rose to 58.9 per cent in October versus 54.6 per cent in the previous month, registering the strongest increase in output in close to nine years.
Energy consumption growth trended higher in October at 12 per cent year-on-year, while Goods and Services Tax (GST) collections have grown 10 per cent to over Rs 1.05 lakh crore.
Daily railway freight tonnage grew by an average 20 per cent year-on-year versus 12 per cent, she said adding bank credit has improved 5.1 per cent.
Also, foreign direct investment (FDI) inflows in April-August at USD 35.37 billion has seen a 13 per cent rise on a year-on-year basis.
RBI has predicted a strong likelihood of Indian economy returning to positive growth in Q3 2020-21, ahead by a quarter from the earlier forecast, she said adding prominent economists have suggested that the rebound is not only due to pent up demand but also due to strong economic growth.
FM announces new employment generation scheme
Finance Minister Nirmala Sitharaman on Thursday announced a new job creation scheme by giving subsidy to those establishments that make new hires.
The subsidy would be to cover for retirement fund contributions by employees as well as employers for two years, she said.
Employees contribution (12 per cent of wages) and employer’s contribution (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said.
Under the Aatmanirbhar Bharat Rozgar Yojana, every Employees’ Provident Fund Organisation (EPFO)-registered establishment taking new employees would get this subsidy.
The scheme will cover any new employee joining employment in EPFO-registered establishment on monthly wages less than Rs 15,000.
It would also cover EPF members drawing monthly wages of less than Rs 15,000, who made an exit from employment during COVID-19 pandemic from March 1, 2020, and is employed on or after October 1, 2020.
The scheme would cover establishments registered with EPFO if they add new employees compared to the reference base of employees as in September 2020.
The condition would be adding a minimum of two new employees for establishments with up to 50 employees. Those establishments with more than 50 employees, would have to give a minimum of five new jobs.
The scheme would be operational till June 30, 2021.
The Finance Minister also announced an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 31, 2021.
Under the scheme, fully guaranteed and collateral-free loans are provided to small and micro-enterprises.
Sitharaman also announced a guaranteed credit scheme for supporting stressed sectors.
The scheme would cover entities in 26 stressed sectors identified by the Kamath Committee plus healthcare sector with credit outstanding of above Rs 50 crore and up to Rs 50 crore as on February 29, 2020.
An additional credit of up to 20 per cent of outstanding as on February 29, 2020, would be given to entities in these sectors, she said.
The tenor of additional credit would be five years, including one year of a moratorium on principal repayment. The scheme would be available till March 31, 2021.
FM announces Rs 18,000 cr additional outlay for urban housing scheme
Finance Minister Nirmala Sitharaman on Thursday announced an Rs 18,000 crore additional outlay for the urban housing scheme to help complete real estate projects that would create jobs and boost the economy.
She said the Rs 18,000 crore would be provided over and above the Budget Estimates for 2020-21 for the Prime Minister Awas Yojana (Urban) through additional allocation and extra-budgetary resources.
This is over and above Rs 8,000 crore already provided this year.
She said the move would help start work on 12 lakh houses as well as complete 18 lakh houses. This would create 78 lakh new jobs as well as demand for steel and cement.
Announcing support for construction and infrastructure, she said Earnest Money Deposit (EMO) and performance security requirements will be relaxed for government tenders.
Performance security on contracts will be reduced to 3 per cent instead of 5 to 10 per cent. This would be extended to ongoing contracts which are free of disputes.
It would also be extended to public sector enterprises, she said, adding states will also be encouraged to adopt the same.
Earnest money deposit (EMD) will not be required for tenders and will be replaced by bid security declaration.
These relaxations will be given till December 31, 2021, she said, adding the move would give relief to contractors by reducing locking up of capital and cost of bank guarantees.
Govt announces tax relief on sale of housing units
Sitharaman announced relaxations in income tax rules to allow the sale of primary residential units of up to Rs 2 crore value below the circle rate.
Till now, only 10 per cent difference between the circle rate and the agreement value was allowed.
To boost residential real estate sector, she said the differential has now been increased to 20 per cent for a period up to June 30, 2021, for only primary sale of residential units of value up to Rs 2 crore.
“This measure will reduce hardships faced by both home-buyers and developers and help in clearing the unsold inventory,” she said.
FM announces Rs 900 crore grant for COVID-19 vaccine research
Sitharman announced a Rs 900 crore grant to the Department of Biotechnology for COVID-19 vaccine research.
She said the grant does not cover the actual cost of vaccine and distribution expenses, which will be made separately as and when the vaccine is available.
She also said that Rs 10,200 crore additional budget outlay will be provided towards capital and industrial expenditure for domestic defence equipment, industrial incentives and infrastructure and green energy.