Atmanirbhar 3.0 – Measures To Boost Employment And Revival Of Economy – Diwali Gift By Finance Minster

Sujay-AjgaonkarCA Sujay Ajgaonkar has systematically set out the details of the stimulus package (Atmanirbhar 3.0) unveiled by the Finance Minister a few days ago. He has detailed how these stimulus measures will boost Employment and revive the Economy

Our honorable Finance Minister Smt Nirmala Sitharaman, in her press conference, highlighted the current state of the Indian economy while rolling out the Atmanirbhar 3.0 relief schemes.

Honourable Finance Minster stressed at a strong recovery in the health of our economy, stating certain facts as follows:

  • Covid active cases declined from over 10 lakh to 4.89 lakh, with the case fatality rate at 1.47%.
  • The Composite Purchase Managers Index (PMI) rose to 58.9 in October Vs. 54.6 last month, stating the strongest increase in output in around 9 years.
  • Energy consumption growth rose 12% YoY in October.
  • GST collections stood at around Rs. 1.05 Lakh Crore in October, a 10% growth YoY.
  • Daily railway freight tonnage grew by an average of 20% YoY.
  • Bank Credit  growth improved by 5.1% YoY.
  • The markets are at record highs with FPI’s turning net investment positive and our Forex reserves stood at USD 560 Billion.
  • FDI inflows between April to August was around USD 35.37 billion recording a 13% rise YoY.
  • The RBI predicts the Indian economy retuning to positive growth in Q3 of this financial year, a quarter earlier than the last forecast.
  • Moody’s revises India’s 2020 GDP forecast to -8.9% from -9.6%; raises 2021 forecast to 8.6% from 8.1%

After giving a progress update on the previous Atmanirbharpronouncements, Honourable Finance Minister  went ahead to announce AtmaNirbhar 3.0, in regard to 12 key areas being:

1) AatmaNirbhar Bharat Rozgar Yojana:

This scheme aims to incentivize job creation. If EPFO-registered establishments recruit new employees without EPFO registration or those who lost jobs earlier during the pandemic, the Yojana will benefit these employees.

The beneficiaries 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 were laid off from employment during COVID Pandemic between 01.03.2020 to 30.09.2020 and were employed on or after 01.10.2020.

The Central Government shall provide subsidy for two years in respect of new eligible employees engaged on or after 01.10.2020 as per the given conditions:

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

This scheme will be effective from October 1, 2020 and operational up to 30th June 2021.

2)Launch of Emergency Credit Line Guarantee Scheme (ECLGS) 2.0:

A Credit guarantee support scheme ECLGS 2.0 is being launched for the Healthcare sector and 26 other stressed sectors with credit outstanding of above Rs. 50 crore and up to ₹ 500 Crore as on 29.2.2020.

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. This would provide the much needed relief to stressed sectors by helping entities sustain employees and meet their liabilities for the continuance of business.

3) Production Linked Incentive worth Rs 1.46 Lakh Crore for 10 champion sectors:

There will be 10 more Champion Sectors that will be covered under the Production Linked Incentives Scheme to help boost the economy and the competitiveness of domestic manufacturing. This will give a big boost to investments, exports and job creation.

A total amount of nearly 1.46 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) Rs 18,000 Crore Additional outlay of for PM Awaas Yojana (PMAY) – Urban:

A sum of Rs 18,000 Crore is being provided for PMAY- Urban over and above Rs. 8000 Crore already allocated this year. This will help ground 12 Lakh houses and complete 18 Lakh others, aiming at creating 78 Lakh additional jobs, improving production and sale of steel and cement, resulting in having a multiplier effect on the economy.

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

The performance security on contracts has been reduced from 5-10% to 3%.It will also extend to ongoing contracts which are free of disputes and Public Sector Enterprises.
EMD for tenders will be replaced by Bid Security Declaration. Relaxations will be given up to 31st December, 2021 under General Financial Rules. This would provide the much needed relief to contractors by reducing the locking up of capital.

6) Income Tax relief for Developers and Home Buyers:

The differential between circle rate and agreement value in real estate income tax under Section 43 CA of IT Act has been increased from 10% to 20%. This is for primary sale of residential units up to ₹ 2 Crore and can be availed from the date of announcement of this scheme, till 30th June, 2021. A consequential Relief up to 20% shall also be allowed to buyers of these units under section 56(2)(x) of IT Act for the said period. This measure aims to reduce the hardships faced by home buyers and also help clear unsold inventory by developers.

7) Rs. 1.1 Lakh Crore Platform for Infra Debt Financing:

The Government will make an equity investment of Rs. 6,000 Crore in the National Investment and Infrastructure Fund (NIIF) debt platform, which will help NIIF provide a debt of Rs. 1.1 Lakh Crore for infrastructure projects by 2025.

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

There has been a significant increase in fertilizer consumption, ₹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:

An additional outlay of ₹10,000 Crore is being provided for PM Garib Kalyan Rozgar Yojana to provide rural employment. This will accelerate growth of the rural economy.

10) Boost for Project Exports:

The EXIM bank extends lines of credit(LOC) on behalf of the government of India, as assistance to developing countries under the Indian Development and Economic Assistance Scheme (IDEAS).

A Rs. 3,000 Crore boost is being providedto EXIM Bank for promoting project exports under the IDEAS Scheme. This will help EXIM Bank facilitate Lines of Credit for assistance in development activities and promote exports from India.

11) Capital and Industrial Stimulus:

An additional Rs. 10,200 Crore budget outlay is being provided towards capital and industrial expenditure on domestic defence equipment, industrial infrastructure and green energy.

12) R&D grant for COVID Vaccine:

Rs. 900 Crore is being provided to Department of Biotechnology for Research and Development of Indian COVID Vaccine.

Hence, these 12 reforms together would infuse around an additional Rs. 2.65 Lakh Crore in the Indian economy and further help strengthen our path towards a strong recovery, post the Covid 19 pandemic.

Ministry of finance link: https://finmin.nic.in

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