Push for inclusive growth in post-COVID India

While providing millions of vulnerable people with food, healthcare, and cash in hand, the Government has been amending policies and regulations to strengthen the country’s labour laws and empower the micro, small and medium enterprises (MSMEs)

May 19, 2020

An Rs.1.7 trillion relief package under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) has been introduced to help the poor fight the economic impact of the Coronavirus pandemic

Technology systems are being utilised to help migrants access Public Distribution System (Ration) from any fair price shop in India from March 2021 with One Nation One Ration Card

States net borrowing ceiling for 2020-21 set at Rs.6.4 trillion, based on 3 per cent of Gross State Domestic Product (GSDP), has been approved to be raised to 5 per cent of GSDP

The limit of collateral-free lending has been raised from Rs.1 million to Rs.2 million for Women Self Help Groups supporting 68.5 million households, greatly boosting the economy

The Government of India has introduced several reforms and undertaken initiatives to assist the worst affected in the Coronavirus (COVID-19) pandemic. Apart from an Rs.1.7 trillion (US$22.5 billion) relief package under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) to help the poor fight the impact of the pandemic, the Central Government has put in measures to strengthen the country’s labour laws and empower the micro, small and medium enterprises. The reforms are part of a stimulus plan worth nearly Rs.21 trillion (US$277 billion), equivalent to around 10 per cent of India’s GDP, meant to deliver progress and opportunities to all in the post-Coronavirus economy. While providing millions of vulnerable people with food, healthcare, and cash in hand, the Government has been amending policies and regulations to encourage trade and investment activities under challenging circumstances. Equity in development, as aimed by the Government, will help India secure its growth leadership in the post-COVID-19 world. 

Equity in development, as aimed by the Government, will help India secure its growth leadership in the post-COVID-19 world.

Here are some of the leading measures ushered in by the Government to provide relief to the most vulnerable amid the health crisis: 

Rs.1.7 trillion Package for the Poor

Rs.1.7 trillion relief package under Pradhan Mantri Garib Kalyan Yojana (PMGKY) for the poor to help them fight the economic impact of the Coronavirus pandemic 

  • Insurance cover of Rs.5 million per health worker with government facilities
  • 800 million poor people given 5 kg wheat or rice per person for the next three months 
  • 1 kg pulses for each household for free every month for the next three months 
  • 200 million women Jan Dhan account holders get Rs.500/month for next three months 
  • Free gas cylinders provided to 80 million poor families for the next three months
  • Increase in MNREGA wage to Rs.202/day from Rs.182 to benefit 136.2 million families
  • Ex-gratia of Rs.1,000 to 30 million poor senior citizens, widows and specially-abled
  • Front-loaded Rs.2,000 paid to farmers under existing PM-KISAN to benefit 87 million farmers
  • Building and Construction Workers Welfare Fund allowed being used to provide relief to worker
  • 24 per cent of monthly wages to be credited into PF accounts for next 3 months for wage-earners below Rs.15,000 p.m. in businesses having >100 workers
  • 50 million workers registered under EPF to get a non-refundable advance of 75 per cent of the amount or three months of the wages, whichever is lower, from their accounts
  • Limit of collateral-free lending raised from Rs.1 million to Rs.2 million for Women Self Help Groups supporting 68.5 million households
  • District Mineral Fund (DMF) to be used for supplementing and augmenting facilities of medical testing, screening, etc

Support for the Rural Economy

Direct Support to Farmers & Rural Economy post-COVID 

  • 30 million farmers with agricultural loans of Rs.4.2 trillion have availed the benefit of 3 months loan moratorium
  • Interest Subvention and Prompt Repayment Incentive on crop loans, due from March 1, extended up to May 31, 2020
  • 2.5 million new Kisan Credit Cards sanctioned with a loan limit of Rs.250 billion

Liquidity Support to Farmers & Rural Economy Provided post-COVID

  • 6.3 million loans of Rs.866 billion approved in Agriculture over March and April
  • Rs.295 billion refinancings provided by NABARD to Cooperative Banks & Regional Rural Banks in March 2020
  • Rs.42 billion support provided under Rural Infrastructure Development Fund to States during March 2020 for rural infrastructure 
  • Working capital limit of Rs.67 billion sanctioned for procurement of agriculture produce to State Government entities since March 2020

Support for Migrants and Farmers

  • Free food grain supply to migrants for two months at an investment of Rs.35 billion
  • Technology systems to be used enabling migrants to access Public Distribution System (Ration) from any fair price shop in India by March 2021 – One Nation One Ration Card 
  • Affordable Rental Housing Complexes (ARHC) for migrant workers/urban poor
  • Rs.15 billion Interest Subvention for MUDRA-Shishu Loans
  • Rs.50 billion Special Credit Facility for Street Vendors 
  • Rs.700 billion boost to the housing sector and middle-income group through the extension of CLSS
  • Rs.60 billion employment push using CAMPA funds
  • Rs.300 billion Additional Emergency Working Capital Funding for farmers through NABARD
  • Rs.2 trillion Concessional credit boost to 25 million farmers through Kisan Credit Cards

Support for Workers and Urban Poor 

  • Government of India has permitted State Governments to utilise State Disaster Response Fund (SDRF) for setting up shelters for migrants and providing them food and water etc
  • The Central Government has released Rs.110 billion of its contribution in advance to all States on 3rd April, to augment funds in their SDRF
  • Hygienically-prepared three meals a day provided for the residents of Shelters for Urban Homeless (SUH) during the lockdown w.e.f March 28, 2020
  • 12,000 SHGs have produced 30 million masks and 120,000 litres of sanitizers. This gave additional employment opportunities to the urban poor
  • Disbursal of Revolving Fund (RF) to Self Help Groups was on-boarded on PAiSA Portal in April 2020 on a pilot basis in Gujarat and is now being rolled out across all the States in May 2020
  • 7,200 new Self Help Groups of urban poor formed during the period starting March 15, 2020

MGNREGS Support to Returning Migrants

  • 146.2 million person-days of work generated until May 13, 2020 
  • Actual Expenditure to date is around Rs.100 billion
  • Work offered to 23.3 million wage seekers in 187,000 Gram Panchayats 
  • 40-50 per cent more persons enrolled, compared to May last year 
  • Average wage rate rose to Rs.202 from Rs.182 in last FY 
  • Drive being undertaken to enroll returning migrants 
  • States/UTs advised providing works to migrant workers as per the provisions of the Act
  • Planning for continuing MNREGA works in Monsoon as well: plantations, horticulture, livestock-related sheds

Focus on Mass Online Education

Technology-driven Systems – Online Education during COVID 

  • SWAYAM PRABHA DTH channels to support and reach those who do not have access to the internet. Three channels were already earmarked for school education; now another 12 channels to be added
  • Provision made for the telecast of live interactive sessions on these channels with experts from home through Skype
  • Tie-up with private DTH operators like Tata Sky & Airtel to air educational video content to enhance the reach of these channels
  • Coordination with the States of India to share air time (4 hrs daily) on the SWAYAM PRABHA channels to telecast their education-related contents
  • DIKSHA platform has had 610 million hits from 24th March till date
  • 200 new textbooks added to e-Paathshaala

State-level reforms 

  • The Centre has extended generous support to states in this hour of need: 
    • Devolution of taxes (Rs.460.4 billion) in April was given fully as if Budget Estimates were valid, even though actual revenue shows an unprecedented decline from Budget Estimates
    • Revenue Deficit Grants to states (Rs.123.9 billion) given on time in April and May, despite Centre’s stressed resources 
    • Advance release of State Disaster Response Fund (Rs.110.9 billion) in the first week of April 
    • Release of over Rs.41.1 billion from Health Ministry for direct anti-COVID activities 
    • At Centre’s request, RBI has increased 
      • Ways & Means Advance limits of States by 60 per cent 
      • Number of days state can be in continuous overdraft from 14 days to 21 days 
      • Number of days state can be in overdraft in a quarter from 32 to 50 days
  • States net borrowing ceiling for 2020-21 is Rs.6.4 trillion, based on 3 per cent of Gross State Domestic Product (GSDP) 
  • In view of the unprecedented situation, the Centre has decided to increase borrowing limits of States from 3 per cent to 5 per cent for 2020-21
  • This will give States extra resources of Rs.4.28 trillion

These measures, along with steps to strengthen the economy, are expected to help India get back on its growth trajectory. The all-encompassing nature of the Government’s reforms will ensure that the growth in the post-COVID-19 world is equitable and sustainable.