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The government released Thursday a ₹2.3 trillion cheap farmer loan program to shore up the rural economy before the main summer crop planting season. He also announced a series of measures to ease the hardships of India’s urban poor who have suffered the most after the economy went dormant due to a tight blockade.
The package for farmers, including fishermen and those dedicated to animal husbandry, will offer access to cheap credit. While the beneficiaries of PM-Kisan will be able to take advantage of the concessional credit through the Kisan credit card, totaling ₹2 billion, 30 million small and marginal farmers will obtain emergency funds to meet crop loan requirements through a refinancing service from the National Bank for Agriculture and Rural Development (Nabard).
However, Finance Minister Nirmala Sitharaman continued to rely heavily on liquidity support rather than direct cash transfers to those affected, which could have further overloaded the government treasury.
While Wednesday’s announcements offering support for small and medium-sized businesses, power distribution companies and non-bank lenders will generate a cash outflow of ₹Rs 20 billion in fiscal year 21, the measures listed on Thursday, are also part of the ₹The 20 billion package announced by Prime Minister Narendra Modi could have an impact of ₹Rs 5 billion in the government chest.
“The focus has been more focused on providing concessional credit and liquidity support rather than direct tax transfer. The measures are welcome from a perspective of alleviating human suffering and the modus operandi could ease the dreaded pressure on the fiscal situation, “said Dhiraj Relli, managing director and chief executive officer of HDFC Securities.” However, this may not result in a direct and immediate boost. demanding and therefore economic recovery may take some time “
Still, some analysts see that the fiscal deficit touches 7.9% of GDP in fiscal year 21.
“After taking into account the cash outflow due to these measures, as well as the previous and recent increase in the special tax and the freezing of the allocation of expenses, we now revise our reference fiscal deficit (excluding additional budgetary resources) to 7.9% of revised gross domestic product in fiscal year 2011 from 3.5% previously, due to lower revenues and higher spending in the context of the covid-19 pandemic, “the State Bank of India said in an investigative report on Thursday.
As immediate relief to 80 million migrant workers struggling to make ends meet due to the loss of their livelihoods, the government said migrants will be given free food grain for two months. Although the states will implement the disbursement, the Center will finance the value of the program ₹Rs 3.5 billion.
“Yes, people are suffering. We note that many people experience severe restrictions, walking back to their homes. The Prime Minister had requested to stay wherever he is. However, since emotions and concerns are what they are, we will have to extend all the benefits and that is what we are trying to do, “Sitharaman said.
About 5 million street vendors who have lost their lives due to the government-imposed blockade to control covid will have access to a special credit from ₹Rs 5 billion. The government will provide initial working capital of up to ₹10,000 within a month to restart business.
“This scheme will cover urban and rural vendors who do business in adjacent urban areas. The use of digital payments and timely payments will be incentivized through monetary rewards, “Sitharaman said.
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