As predicted on Sirf News on 21 March, the Narendra Modi government on 26 March announced a Rs 1.7 lakh crore Prime Minister Gareeb Kalyan Yojana to cater mainly to the poor people whom the coronavirus outbreak in the country has hit the hardest following the 21-day nationwide lockdown. Finance Minister Nirmala Sitharaman said the relief package included direct benefit cash transfers, free LPG, grains and pulses for the poor. Members of the middle class can withdraw funds from their Employees Provident Fund (EPF) account.
The stock market received Sitharaman’s announcement at 1 PM well. Sensex went up 1,055.11 points (by 3.70%) at 29,590.89. It rallied over 1,500 points in the morning session. The NSE Nifty responded similarly, going up by 284.20 points (3.42%), higher at 8,602.05 at 2:30 PM.
The finance minister said, “We have made provision so that bank branches can remain open,” in keeping with the concern for the people’s cash crunch during the lockdown.
The package is aimed at boosting micro, small and medium enterprises (MSMEs) and daily wage workers besides injecting liquidity in the market.
Prime Minister Modi had last week constituted a finance minister-headed task force to make a package for the economy hit by the coronavirus outbreak in the country, a disease that has acquired the proportion of a pandemic worldwide.
Helping poor fight coronavirus economically too
Continuing with the reflection of the government’s concern for the poor, Sitharaman said “the central government has given orders to state governments to use funds of Rs31,000 crore to provide relief” to construction workers. This scheme comes into force with effect immediately. “People will get the benefits 1 April onwards,” Sitharaman announced.
Ujjwala beneficiaries will get free cooking gas (LPG) cylinders in the next three months, as per the finance minister’s announcements. This will benefit 8.3 crore below-poverty-line (BPL) families.
The government’s enhanced direct benefit cash transfers will benefit farmers, MGNREGA, poor widows, Pensioners and the physically challenged.
An ex-gratia of Rs 1,000 to 3 crore poor senior citizens, poor widows and poor disabled was announced too.
The women Jan Dhan account holders will get an ex-gratia amount of Rs 500 per month for three months to run their households during this period.
Every MNREGA worker will get a hike of Rs 2,000, the finance minister said. “We announce a wage increase in MNREGA. It will benefit 5 crore families,” Sitharaman said. This package will impact 80 crore people, she said.
“No poor will be without food in his hand for the next three months,” assured Sitharaman, adding that the government would give 1 kg dal (lentils) for free as help during the lockdown meant to prevent the spread of coronavirus.
The finance minister said the Prime Minister Garib Ann Yojna would ensure that every poor citizen got an additional 5 kg rice or wheat per month in addition to the existing scheme.
“We do not want anyone to remain hungry,” Sitharaman said, assuring the poor that “we have now come with a package which will immediately take care of the welfare concerns and those who need immediate help”.
Middle and upper classes not forgotten
For the middle class to tide over the coronavirus lockdown, “EPFO will allow 75% non-refundable advance or three months of wages, whichever is lower,” the finance minister said.
Sitharaman announced she was doubling the collateral-free loan ceiling to Rs 20 lakh to 63 lakh women self-help groups. While this will impact 7 crore households, it may also boost cottage and even small industries.
The government will pay EPF contribution, the part that the employer contributes as well as that which the employee lets go every month, for three months. However, this would apply only to establishments with less than 100 employees, out of which 90% earn less than Rs 15,000 per month.
As many as 8.69 crore farmers will immediately benefit from the direct cash transfers. The government will transfer the first instalment of Rs 2000 in the first week of April, Sitharaman said.
Under the stimulus package, health workers to get medical insurance cover of Rs 50 lakh.
Sonia Gandhi wants more
Not satisfied with the measures the government announced today, Indian National Congress’s interim president Sonia Gandhi urged the Centre to defer all EMI payments for six months.
Gandhi demanded that the Modi government bring in a minimum income guarantee scheme, ‘Nyay Yojana’, which the INC had put in its 2019 election manifesto, hardly impressing the people.
Cost of coronavirus disease and lockdown for prevention
The cost of the COVID-19 lockdown on the Indian economy will be Rs 9 lakh crore or 4% of the GDP, estimates British brokerage firm Barclays.
Reuters had earlier reported that the economic package might be used to put money directly into the accounts of more than 100 million poor and to support businesses hit the hardest by the lockdown.
A Nomura report said that nearly 75% of the Indian economy would be shut down during the 21-day period. The lockdown will cause a direct output loss of approximately 4.5%., it said.