Measures to boost Make in India, relief for migrant workers: Steps Nirmala Sitharaman may announce today

Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman. Sitharaman on Wednesday announced measures worth Rs 6 lakh crore. (Express photo)

While the main thrust of Finance Minister Nirmala Sitharaman’s announcements on Wednesday, as part of the Rs 20 lakh crore Atmanirbhar Bharat Abhiyan economic package, was relief to Medium, Small and Micro Enterprises (MSMEs), the rest is expected to be directed towards relaxation to states in their borrowing plans, measures aimed at boosting Make in India and relief for migrant workers.

Sources said the government is expected to announce further measures that will provide agriculture sector loans worth Rs 5 lakh crore. Steps taken under the Make in India initiative are expected to be worth Rs 1 lakh crore spread over next few years. Migrant workers and personal income tax payers may also get some relief totaling Rs 1 lakh crore.

Apart from a Rs 1.7 lakh crore income support and relief measures announced earlier, alongside a Rs 20,000 crore package for the health sector, the Reserve Bank of India has announced monetary stimulus measures totaling Rs 8.1 lakh crore. This makes up Rs 10 lakh crore worth of stimulus already announced by the government and the RBI.

The central bank had announced significant steps to boost liquidity position of financial sector through long-term repo operations, foreign exchange swaps, reduction in cash reserve ratio and a special window among others.

Earlier on March 27, RBI Governor Shaktikanta Das had announced three liquidity measures comprising targeted long-term repo operations (TLTRO), cash reserve ratio cut of 100 bps and increase in marginal standing facility (MSF) to 3 per cent of the statutory liquidity ratio (SLR). The RBI said that the three measures would pump Rs 374,000 crore to stabilize the financial system that was hit by the coronavirus pandemic. Even on February 6, RBI had infused liquidity worth Rs 2.8 lakh crore through various measures.

While bankers expected that this huge liquidity injection into the financial system would help financial institutions and flow of funds to the real economy, three weeks later RBI announced its second relief package. This time the central bank stepped in again to ensure liquidity and alleviate stress in segment including state finances, NBFCs, micro-finance institutions, commercial real estate, and housing.

In its second tranche, RBI proposed to release additional funds of Rs 1 lakh crore – Rs 50,000 crore refinance facility to banks for lending to NBFCs through a new TLTRO 2 and a Rs 50,000 crore refinance support to financial institutions (Nabard: Rs 25,000 crore; Sidbi: Rs 15,000 crore; and, NHB: Rs 10,000 crore).

Besides this, on April 27, the Reserve Bank of India also opened a special liquidity facility for mutual funds amounting to Rs 50,000 crore. This was necessitated after Franklin Templeton announced to wind up six credit risk schemes leading to redemption pressure in the debt funds.

Regarding this, the RBI said “it remains vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve financial stability. With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of ₹ 50,000 crore ”. The central bank, along with the government, is expected to continue the momentum in improving liquidity in the economy.

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