Stimulus Phase 2 Focuses Less on India and More on Bharat

When the Prime Minister announced the Rs.20 trillion package on 12 May, he also emphasized that the nitty-gritty of the package would be rolled out by the Finance Minister in a phased manner.

Throwback to Day 1:

Day one had focused on Indian economy as a whole. The package appeared rolled out to a clear plan. On day 1, the focus was entirely on making the economy the nucleus of the government’s medium term policy direction. The package included generous loans to MSMEs, special packages for NBFCs and MFIs, a special Rs.90,000 crore package for the DISCOMS to be executed by REC and PFC etc. Apart from the slew of macro level measures, the government also gave a 25% concession on TDS deductions to small businesses. In addition, the last date for filing of returns was also postponed from July 31^st to November 30^th. Above all, the realty projects got a 6-month breather even as smaller businesses could look forward to prompt payments. For more details you can visit the detailed coverage on stimulus package 2020 Day 1:

Day 2 – Focus shifted from India to Bharat

The first day had enough for banks, NBFCs and industry to get their calculators out and start working. Hence the second day focused almost entirely on the more vulnerable sections of the Indian population like farmers, migrant workers and other low income groups. Here are some key announcements made by the government on Day-2.

1. A comprehensive credit facility of Rs.5000 crore will be extended to cover nearly 50 lakh street vendors with a capital of Rs.10,000 each to get them back into business.
2. The “1 nation - 1 ration card” scheme will benefit poor and migrant workers. Over 8 crore migrant workers to get free food grains for next two months. Non-ration card holders to get 5 kg of wheat/rice per family and 1 kg of gram free of cost. Government has already transferred Rs.11,000 crore to fund 3 meals per day at shelters for migrants.
3. Concessional credit worth Rs.200,000 crore announced and will benefit 2.50 crore farmers across India. This will include fishermen and animal husbandry workers. FM also announced the extension of the special Interest subvention scheme on farmer loans until May 31, 2020. FM has also expressed willingness expand the ambit of MNREGA.
4. Government will bring in Universal Minimum Wage (UMW) and National Floor Wage (NFW) to remove disparity between states. In addition, FM has announced mandatory ESIC coverage for employees of hazardous industries.
5. A special scheme for the urban poor will include a special rental housing scheme launched by the government. Under this scheme, the empty government land will be leveraged to build more housing and make homes available to all.
6. The FM also announced a further boost to affordable housing, which appears to have taken a back seat in the melee of COVID-19 and the lockdown. The credit linked subsidy scheme has been extended up to March 2021. This will be for families in the lowest strata of middle income group (income of 6-18 lakh/annum). This is also expected to reinvigorate construction demand.
7. The finance minister has also extended the interest subvention support of 2% to all Shishu loan holders (up to Rs.50,000).

Day 2 may not have been as big bang as the first day but it has made some very important announcements at the grass root level. The government tacitly acknowledges three realities here. Firstly, any revival in the Indian economy is not possible unless the most vulnerable sections are supported. Secondly, the large swathes of rural India can have a multiplier effect on demand creation, if supported adequately at the right time. Lastly, migrant workers need to get back to their places of work if the supply chains have to work smoothly. The next few days could be interesting pointers to the road ahead.