Stimulus 3.0 Package

Stimulus 3.0 Package (Atmanirbhar Bharat 3.0)

Finance Minister Nirmala Sitharaman’s targeted measures announced via a comprehensive stimulus package on Thursday will be a booster for the Indian economy that has been hit by the Covid-19 pandemic. The 12 areas covered as part of ‘Atmanirbhar Bharat 3.0’ across key sectors are well targeted, and promise to kickstart the engines of growth in the economy by bolstering demand, investments, exports and job creation.

The size of the stimulus under the package amounts to Rs2.65 lakh crore, taking the total stimulus announced by the GoI and RBI till date to Rs29.87 lakh crore, which works out to a significant 15% of national GDP. The package focused greatly on incentivising new employment through a slew of measures in both the formal and informal sectors of the economy.

Finance Minister Nirmala Sitharaman economic stimulus announcements: Union Finance Minister Nirmala Sitharaman on Thursday announced new stimulus measures under Atmanirbhar Bharat 3.0 to boost the Indian economy amid the ongoing COVID-19 pandemic. The finance minister’s announcements come one day after the Cabinet approved the Production-Linked Incentive (PLI) scheme for 10 champion sectors including textiles, food, electronic and technology products, automobiles and auto components manufacturing, among others. The PLI scheme for the 10 identified sectors will be operational for five years with a total estimated outlay of ₹ 1.46 lakh crore.

What is stimulus 3.0 Package (Atmanirbhar Bharat 3.0)?
Stimulus 3.0 Package is a targeted and comprehensive package to stimulate growth and economic recovery. This will be a booster for the Indian economy that is being hit by the COVID-19 pandemic situation.

It was also announced that the Atmanirbhar Bharat Rozgar scheme Will come into force from first October and will continue till June 30 next year. This will create more jobs New new employment opportunities that will benefit the crores of workers. 

Under this scheme, the employment generation incentives will cover almost all the companies registered under the Employees Provident Fund Organisation. The scheme is expected to cover 65% of employees and 95% of establishments in the formal sector.

Our finance minister in the media briefing also doubled the differential between circle rate (stamp duty value) and agreement value (purchase value) from 10% to 20% for the sale of residential houses up to Rs.2 crores. This clearly means that the buyers will get a tax relief of up to 20% under the income tax act. Our finance Minister also added that the income tax relief will be available till June 30, 2021.

Key Takeaways From Stimulus 3.0 Package (Atmanirbhar Bharat 3.0):

Atmanirbhar Bharta Rozgar Yojana: Ms. Sitharaman announced the new Aatmanirbhar Bharat Rozgar Yojana which will incentivise the creation of new jobs. The new employees hired by the EPFO-registered organisations will receive benefits during COVID-19. If the EPFO registered establishments take in new employees or those who lost jobs earlier will get benefits from government.

Emergency Credit Line Guarantee Scheme: The emergency credit line guarantee scheme (ECLGS) for MSMEs, businesses, MUDRA borrowers and individuals (loans for business purposes), has been extended till March 31, 2021. A credit guarantee support scheme for health care sector and 26 sectors stressed due to COVID-19 pandemic was also launched. The entities of the 26 stressed sectors are identified by Kamath Committee.

Production-Linked Incentive: The PLI scheme worth ₹ 1.46 lakh crore is being offered to 10 champion sectors which will help boost the efficiency and competitiveness of domestic manufacturing. A total amount of ₹ 1.5 lakh crore has been earmarked across sectors, for the next five years.

Pradhan Mantri Awaaz Yojana Urban: An additional outlay of ₹ 18,000 crore over budget estimate towards PM Awaaz Yojana Urban has been announced which will help ground 12 lakh houses and complete 18 lakh houses. This will create additional 78 lakh jobs and improve the production and sale of cement and steel.

Relaxation of Earnest Money Deposit (EMD): The performance security on government contracts in the construction/infrastructure sector will be reduced to 3 per cent from 5-10 per cent. EMD will not be required for bid tenders and will be replaced by Bid Security Declaration. The relaxations will be applicable till December 31, 2021.

Income Tax Relief for Developers and Home Buyers: The finance ministry announced tax relief for developers and home buyers for houses up to ₹ 2 crore. The differential between circle rate and agreement value in real estate income tax is being increased from 10 per cent to 20 per cent from today (November 12, 20) till June 30, 2021, for primary sale of residential units up to ₹ 2 crore the income tax relief provides an incentive to the middle class to buy homes, Ms Sitharaman said.

Equity Investment in Debt Platform by NIIF: The government will make ₹ 6,000 crore equity investment in debt platform of National Investment and Infrastructure Fund (NIIF), which will help NIIF raise ₹ 1.1 lakh crore by 2025 for financing infrastructure projects.

Stimulus 3.0 Package (Atmanirbhar Bharat 3.0) Highlights:

• Rs 192,800 crore allocated for Pradhan Mantri Garib Kalyan Package (PMGKP)
• Rs 1,102,650 crore allocated towards Atmanirbhar Bharat Abhiyaan 1.0
• Rs 82,911 core for PMGKP Anna Yojana (which has been extended for five months till November)
• Rs 265,080 crore allocated under today’s set of announcements under Atmanirbhar Bharat 3.0
• Rs 1,271,200 crore from RBI measures announced till October 31, 2020
• Total is Rs 2,987,641 crore or 15 percent of GDP.
• Rs 145,980 crore for Atmanirbhar Manufacturing – PLI scheme for 10 champion sectors
• Rs 65,000 crore support for agriculture in form or fertiliser subsidy
• Rs 18,000 crore for Housing for All under PMAY-U
• Rs 10,200 crore for industrial infrastructure, industrial incentives and domestic defence equipment
• Rs 10,000 crore towards boost for rural employment
• Rs 6,000 crore towards equity infusion in NIIF debt PF to boost infrastructure
• Rs 6,000 crore allocated to Atmanirbhar Bharat Rozgar Yojana (total allocation till date is Rs 36,000 crore)
• Rs 3,000 crore towards boost for project exports
• Rs 900 crore as R&D grant for COVID Suraksha i.e Indian vaccine development

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