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The government on Monday unveiled a slew of measures for various sectors, especially health, in a bid to prepare for a better tomorrow. These include a new loan guarantee scheme, enhancement of the Emergency Credit Line Guarantee Scheme (ECLGS), a new scheme for public health, and a boost to export insurance cover.
Additional subsidy for food and fertiliser along with power sector reforms, which were already announced, form part of this plan.
Announcing the measures, Finance Minister Nirmala Sitharaman said the total amount involved in all these measures exceeds ₹6.29-lakh crore.
No pressure on finances
But, according to some experts, since these measures are primarily credit driven and the outlay for some has already been factored in, there won’t be any significant pressure on the government’s finances.
A senior spokesman of Jairam Ramesh said credit guarantee schemes have not vouchsafed revival since India’s economic downturn.
One of the new measures relates to the ₹1.1-lakh crore Loan Guarantee Scheme for Covid Affected Sectors. Out of this, ₹50,000 crore is for the health sector, and the balance for tourism and other sectors.
Sitharaman said the new scheme aims at up scaling up the medical infrastructure in under-served areas. The scheme will guarantee loans for expansion and new projects in cities other than the eight metros.
Under the new scheme, guarantee coverage will be 50 per cent for expansion project and 75 per cent for a new project in districts other than aspirational districts, where all projects will get guarantee coverage of 75 per cent. Maximum loan per applicant will be ₹100 crore. “Interest rate for such loans has been capped at 7.95 per cent,” the Minister said.
The government also wants to disburse assistance of ₹60,000 crore to various sectors, including tourism. Working capital/personal loans will be provided to people in tourism sector to discharge liabilities and restart businesses impacted by the Covid-19 pandemic.
The scheme will cover 10,700 regional level tourist guides recognised by the Tourism Ministry and State governments and a thousand Travel and Tourism Stakeholders (TTS) recognised by the Tourism Ministry. TTS’s will be for loans up to ₹10 lakh each while tourist guides can get up to ₹1 lakh each.
“There will be no processing charges, waiver of foreclosure/prepayment charges and no requirement of additional collateral, Sitharaman said, adding the interest rate for these sectors has been capped at 8.5 per cent.
In the set of new schemes is also the Credit Guarantee Scheme for Micro Finance Institutions (MFI) that aims to benefit the smallest borrowers, served by Micro Finance Institutions. Guarantee will be provided to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs or MFIs for on-lending up to ₹1.25 lakh to approximately 25 lakh small borrowers.
With inclusion of more sectors in ECLGS, the government has raised the total allocation under the scheme to ₹4.5-lakh crore from ₹3-lakh crore. As on date, ₹2.73-lakh crore has been sanctioned and ₹2.10-lakh crore disbursed under the scheme.
Financial Services Secretary Debashish Panda said the attempt is to also to ensure smooth flow of credit to entrepreneurs. “Now, by creating this window, one you are encouraging banks to lend to the enterprises who need money to start their operation, to expand and, secondly, through this method, we are also ensuring they get credit at a low cost. Third, we are ensuring adequate liquidity through various financial institutions; the second scheme (MFI) attempts to do that,” he said.
A new scheme for strengthening public health with emphasis on children and paediatric care/paediatric beds with total outlay of ₹23,220 crore, out of which ₹15,000 crore is Centre’s share was also announced.
DK Srivastava, Chief Policy Advisor with EY India, said the direct stimulus is limited to three main initiatives - extension of the distribution of free food grains under PMGKY, additional health sector expenditure and improving rural connectivity through expanding BharatNet. “Considering half of this amount as pertaining to the current fiscal year, the total additional burden on the 2021-22 budget from these three initiatives would be ₹ 1,18,390 crore. This amounts to about 0.5 per cent of estimated GDP for 2021-22,” he said.
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