Sakshi Education
By Srirangam Sriram, Sriram's IAS, New Delhi.
The COVID relief package announced in three tranches since May 2020 till November has both fiscal stimulus measures for social support and also substantial liquidity support for the economic growth.
Fiscal stimulus has many aspects like tax relief; both direct and indirect (e.g. payment deferrals, rate reductions); employment-related measures like higher outlay for MGNREGA and preference for the migrants; Pradhan Mantri Garib Kalyan Anna Yojana (Food scheme); direct benefit transfer related for farmers, senior.
citizens etc;200 million woman Jan Dhan account holders to be given ex-gratia amount of INR 500 per month for a limited period to run the affairs of their households; under Ujwala scheme , free LPG cylinders for 3 months; for 630,000 Self-help Groups (SHGs), which help 70 million households, the government doubled collateral-free loans to Rs 200,000; medical insurance cover of Rs 5 million per healthcare worker; State governments have been directed to use the welfare fund for building and construction workers. The District Mineral Fund, worth about INR 310 billion, will be used help those who are facing economic disruption because of the lockdown... to name a few.
During the pandemic, the Reserve Bank of India (RBI) has come up with various measures to fight the battle by way of making more money available at affordable rates for arresting the fall of the economy and enabling recovery. RBI cut repo and reverse repo rates to make sure that banks have enough liquidity and they lend.
Long Term Repo Operation (LTRO), which provides one to three year lending to banks at the current repo rate was introduced. Targeted Long Term Repo Operation (TLTRO) was introduced to direct certain sectors like the auto and housing for cheap loans. Incremental CRR on certain targeted loans became zero.
A special finance facility of Rs 50000 crore of NABARD, SIDBI, and National Housing Bank was created. A special liquidity facility for mutual funds was created.
RBI decisions led to extend the loan moratorium; give credit support to the exporters and importers; and increase the state’s Ways and Means Advance (WMA) limit.
The mix of stimulus through extra spending and the liquidity support meant that government did not have to monetise the deficit and thus protect the economy from destabilisation and flight of capital. Liquidity support that was calibrated is also yielding results by way of green shoots in the economy.
Fiscal stimulus has many aspects like tax relief; both direct and indirect (e.g. payment deferrals, rate reductions); employment-related measures like higher outlay for MGNREGA and preference for the migrants; Pradhan Mantri Garib Kalyan Anna Yojana (Food scheme); direct benefit transfer related for farmers, senior.
citizens etc;200 million woman Jan Dhan account holders to be given ex-gratia amount of INR 500 per month for a limited period to run the affairs of their households; under Ujwala scheme , free LPG cylinders for 3 months; for 630,000 Self-help Groups (SHGs), which help 70 million households, the government doubled collateral-free loans to Rs 200,000; medical insurance cover of Rs 5 million per healthcare worker; State governments have been directed to use the welfare fund for building and construction workers. The District Mineral Fund, worth about INR 310 billion, will be used help those who are facing economic disruption because of the lockdown... to name a few.
During the pandemic, the Reserve Bank of India (RBI) has come up with various measures to fight the battle by way of making more money available at affordable rates for arresting the fall of the economy and enabling recovery. RBI cut repo and reverse repo rates to make sure that banks have enough liquidity and they lend.
Long Term Repo Operation (LTRO), which provides one to three year lending to banks at the current repo rate was introduced. Targeted Long Term Repo Operation (TLTRO) was introduced to direct certain sectors like the auto and housing for cheap loans. Incremental CRR on certain targeted loans became zero.
A special finance facility of Rs 50000 crore of NABARD, SIDBI, and National Housing Bank was created. A special liquidity facility for mutual funds was created.
RBI decisions led to extend the loan moratorium; give credit support to the exporters and importers; and increase the state’s Ways and Means Advance (WMA) limit.
The mix of stimulus through extra spending and the liquidity support meant that government did not have to monetise the deficit and thus protect the economy from destabilisation and flight of capital. Liquidity support that was calibrated is also yielding results by way of green shoots in the economy.Published date : 15 Dec 2020 12:40PM
