Recent trends of economic recovery are testimony to govt’s intervention: Fin Min sources

In the trying times of a pandemic, when COVID-19 has spared none by hitting hard on the lives and livelihoods of people and the economies around the globe, the Government of India has been taking all possible measures to mitigate the COVID impact. Recent trends of economic recovery bear the testimony of its timely intervention – said a top source in the Ministry of Finance.

The source was responding to the report published in a certain section of media where an impression has been sought to be created that the Government lacks consensus at the highest levels while pushing the fiscal stimulus and packages. The source said that swift steps taken by the Government and recent trends of economic recovery — increase in GST collection, PMI index, Exports etc. — themselves dispel the myth of tight fists and any lack of consensus.

"The Government has been aware of the ramifications of COVID-19 pandemic and that is the reason why the Ministry of Finance (MoF) has been proactively and continuously taking measures to provide support to those who need it the most in a holistic manner and those measures are yielding results”, said the top government source.

“While reading the report card of the Government’s comprehensive measures against the challenges of COVID-19, one must acknowledge the swiftness with which the Government formulated and implemented two major Stimulus Packages — Pradhan Mantri Garib Kalyan Package (PMGKP) on March 26 and Aatmnirbhar Bharat Package (ANBP) on May 12 — a special economic and comprehensive package of Rs 20 lakh crore – equivalent to 10 per cent of India’s GDP," said the source.

Another source in the know of the matter and who has been privy to most of the meeting of PMO on COVID impact mitigation exercise said that under the two packages, the Government has implemented several measures, which, inter-alia, include relief measures for households such as in-kind (food; cooking gas) and cash transfers to senior citizens, widows, disabled, women Jan Dhan Account holders, farmers; insurance coverage for workers in the healthcare sector; and wage increase for MGNREGA workers and support for building and construction workers, collateral-free loans to self-help groups, reduction in EPF contributions, employment provision for migrant workers (Pradhan Mantri Garib Kalyan Rojgar Abhiyaan). The implementation of the package is reviewed and monitored regularly at the highest level”, said the source.

Major among them are:

• Pradhan Mantri Garib Kalyan Package (PMGKP) around 42 crore poor people have received financial assistance of Rs. 68,921 crore as on 1st October 2020.
• Rs 30,952 crore credited through DBT to 20.65crore (100%) women Jan Dhan account holders.
• Almost 8.94 crore farmers under PM Kisan were paid with two instalments of Rs 17,891 crore each.
• Free food grains to about 81 crore beneficiaries @5 kg per beneficiary for 8 months has been arranged with a total allocation of 320 lakh metric tonne grains. This covers more than 60 % of India’s population.
• Free pulses/chana to about 20 crore household @1 kg per month for 8 months is being provided for which approximately 16 lakh metric tonne grain is allocated.
• Rs 4.29 crore PM Ujjwala Yojana cylinders delivered to beneficiaries for April 2020, 3.78 crore for May, 3.05 crore for June, 1.05 crore for July, 0.89 crore for August, and 0.72 crore for September.
• Insurance scheme for health workers in Government hospitals and Health care centres operationalised w.e.f. March 30 and Rs 130.5 crore paid towards insurance premium till date.
• Rs 15,000 crore fund for the health sector is being implemented in 3 phases – In the first phase of Rs 9904 crore (Jan 2020 to June 30 2020), NHM allocated Rs 3379 crore, Procurement Rs 4724 crore, DHR/ICMR Rs 1163 crore, NCDC Rs 18 crore and Railways Rs 620 crore. The second phase (July 1, 2020, to March 31, 2021) to be of Rs 5048 crore and third phase (April 2021 to March 2024) of Rs 48 crore.
• As on September 30, about 30 crore man-days employment has been provided to migrant workers and more than Rs 27,000 crore spent so far under Garib Kalyan Rojgar Abhiyaan. More than 1.14 lakh water conservation structures, about 3.65 lakh rural houses and nearly 10,500 community sanitary complexes have been created under the Abhiyaan. 1,662 Gram Panchayat have been provided internet connectivity. A total of 17,508 works related to solid and liquid waste management undertaken and 54,455 candidates have been provided skill training through Krishi Vigyan Kendras (KVKs). 6727 works have been taken up through District Mineral Funds.
• Under MGNERGS an additional provision of Rs.40,000 crore has been made for the FY 2020-21 raising the total allocation to Rs 1,01,500 crore in MGNREGS.
• 1.82 crore building and construction workers received financial support amounting to Rs 4,987.18 crore.
• 40.59 lakh members of EPFO took online withdrawal benefit of non-refundable advance from EPFO account amounting to Rs 10,615 crore.

All these money and assistance have gone directly through Direct Benefit Transfer into the bank accounts and in the hands of deserving people, without any middlemen and any delay.

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Relief measures for MSMEs

There were also relief measures for MSMEs and entrepreneurs such as collateral-free lending programme with 100 per cent credit guarantee, subordinate debt for stressed MSMEs with partial guarantee, partial credit guarantee scheme for public sector banks on borrowings of non-bank financial companies, housing finance companies (HFCs), and micro finance institutions, Fund of Funds for equity infusion in MSMEs, additional support to farmers via concessional credit, as well as a credit facility for street vendors (PM SEVA Nidhi), amongst others”. Major among them  are

• Rs 3 lakh crore Collateral-free Automatic Loans for Businesses, including MSMEs is being provided of which Rs. 1,25,412 crore is  already disbursed to more than 25.63 lakh borrowers in just four months;
• Rs 45,000 crore sanctioned in Partial Credit Guarantee Scheme 2.0 for NBFCs;
• Rs 30,000 crore in Special Liquidity Scheme for NBFCs/ HFCs/ MFIs has been sanctioned;
• Rs. 30,000 crore additional Emergency Working Capital Funding is being provided to farmers through NABARD;
• Rs 1 lakh crore Agri Infrastructure Fund for farm-gate infrastructure for farmers - Farmers will get loan for building storage for storing food grains, to buy machines for making food grains ready to eat and buy vehicles for transporting food.
• Rs 2 lakh crore Concessional credit boost to 2.5 crore farmers through Kisan Credit Cards – Farmers (also fishermen and animal husbandry farmers) can spend more now on their credit cards - In Phase I, 58.12 lakh KCC cards with KCC limit of Rs. 46,330 crore had been sanctioned, Under Phase II, as on 25th September 2020, a total number of 83.03 lakh KCC with KCC limit of Rs. 78,999.80 crore sanctioned.
• Rs 20,000 crore for fishermen through Pradhan Mantri Matsya Sampada Yojana (PMMSY) – Support to existing fishermen to expand and new ones to set up a business.
• Rs 5000 crore Special Credit Facility for Street Vendors – will support businesses by the roadside by giving them easy loans.
• Rs 50,000 crore liquidity has been injected into the economy through TDS/TCS rate reduction.
• Ministry of Finance  helped liquidity in the market by urgently releasing refunds under the special drive worth Rs. 1,18,324 crore in Direct Taxes and of worth Rs. 66,861 crore in Indirect Taxes – an increase of more than 6%  as compared to the last year.

Support to States

Also, the Centre has continued to lend unflinching support to State Governments towards faster economic revival. Despite the pandemic and the consequent fall in gross tax revenue, Rs 2,17,976 crore has been transferred to State Governments as devolution of share of taxes by the Centre in the first five months of FY 2020-21 which is only Rs 37,629 crore lower than the previous year.

The Centre has already raised the borrowing limit of states from 3 per cent to 5 per cent of GDP to cope with pandemic induced requirement of higher expenditure. As per recently announced, the borrowing programme of the Government of India Rs 4,34,000 crore for the second half of FY 2020-21 is expected to be completed by January 2021 to help generate sufficient space to manage the borrowing programme of the State Governments smoothly.

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Recovery is underway

The implementation of ABNP and unlocking of the economy have ensured economic recovery in India gaining momentum. Rising tractor sales and healthy monsoons suggest that Kharif crop is expected to be above normal, implying robust rural demand in near future as well, also augurs well for upcoming Rabi sowing.

Registration of two-wheelers/three-wheelers/passenger vehicles along with tractor sales are reaching/surpassing previous year levels in August. Recovery in rail freight revenue earnings going past previous levels in August and showing strong 13.5 per cent growth in the first 20 days of September, the first time since March while port cargo traffic continues its upward trajectory, aviation activity also catching up, a further uptick in the steel sector as it inches up to previous year levels.

Power consumption in September up to the 29th of the month has now crossed previous year levels having grown at an encouraging rate of 4.2 per cent, YoY. Value and number of E-way bills generated are crossing previous year levels.

GST collections for the first time this year has gone past the previous year level by 4.3 per cent in September. Electronic payment transactions through the banking channel (UPI) has hit an all-time in August moving ahead of the February level. At an eight-year high of 56.8 in September 2020, India’s manufacturing purchasing managers’ index in the expansionary territory for two months, which augurs well for economic expansion in the coming months.

The top source said that the phased relaxation of the lockdown, supported by the enabling policies of the Government, has resulted in a much higher level of economic and business activities in the months of July, August and September. This is evident in the growth of high-frequency indicators like PMI Manufacturing, index of eight core industries,  GST collections E-way bills, Kharif sowing, power consumption, railway freight, cargo traffic and passenger vehicle sales.

“The above prompt action in policy and its implementation clearly dispels the myth that the Government lacks consensus or the will to serve its people in a holistic manner. The data proves exactly the contrary," said the source.

(PTI Photo for representation)