Key Highlights of FM Nirmala Sitharaman’s Press Conference to Boost COVID-19 affected Sectors

  • Blog|Company Law|
  • 4 Min Read
  • By Taxmann
  • |
  • Last Updated on 5 July, 2021

Topics covered in this article are as follows:

  1. Credit Guarantee Scheme for the healthcare Sector
  2. Credit Guarantee Scheme for Banking Industry
  3. Credit Guarantee Scheme for Micro, Small, and Finance
  4. Credit Guarantee Scheme for Tourism Industry
  5. Free Tourist Visa to 5 Lakh Tourists
  6. Extension of Schemes
  7. Credit Guarantee Scheme for Public Health
  8. Booster for the insurance sector
  9. Extension of Tenure of PLI Scheme for Large Scale Electronics Manufacturing
  10. New Streamlined Process for PPP Projects and Asset Monetization

Key highlights of FM Nirmala Sitharaman’s press conference to boost Covid-19 affected sectors

The Union Finance Minister Nirmala Sitharaman addressed a press conference at 3 pm on Monday, 28 June 2021 wherein, the FM announced various reliefs for the sectors that were badly affected by the second wave of Covid -19 Pandemic. The second wave of coronavirus pandemic has severely hit the country. As a result,  several states announced local lockdowns to prevent the virus from spreading and the lockdown critically disturbed the sectors such as tourism, hospitality sector, Healthcare, and MSMEs. The relief measures that were announced by the Union Finance Minister Nirmala Sitharaman to revive the economy affected by the second wave of covid-19 are summarized hereunder.

1. Credit Guarantee Scheme for the Healthcare Sector

The Finance Minister has announced Rs 1.1 lakh crore loan guarantee scheme for COVID-affected sectors. The scheme would include a Rs 50,000 crore loan to the health sector aimed at scaling medical infrastructure targeting underserved areas.

The scheme would entail guarantee cover for expansion and new projects related to health and medical infrastructure in cities other than eight metropolitan cities.

Facility for health sector includes maximum loan amount Rs 100 cr, max interest rate capped at 7.95 percent. For other sectors: The interest rate is capped at 8.25 percent. Coverage will be changed based on evolving needs.

2. Credit Guarantee Scheme for Banking Industry

The Credit Guarantee Scheme will be provided to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs for on-lending up to Rs 1.25 lakh to approximately 25 lakh small borrowers. However, the Interest rate on loans from banks to be capped at MCLR plus 2%.

The maximum loan tenure 3 years, 80% of assistance to be used by MFI for incremental lending, interest at least 2% below maximum rate prescribed by RBI.

3. Credit Guarantee Scheme for Micro, Small, and Finance

The finance minister announced a credit guarantee scheme to facilitate loans to 25 lakh persons through microfinance institutions. Under this interest rate on loans from banks to be capped at MCLR plus 2%. Maximum loan tenure 3 years. Maximum loans of Rs 1.25 lakh.

4. Credit Guarantee Scheme for Tourism Industry

Under the new loan Guarantee scheme for COVID-affected sectors, working capital/personal loans will be provided to people in the tourism sector to discharge liabilities and restart biz impacted due to COVID-19.

However, loans will be provided with a 100 % guarantee up to the following limits:

  • 10,00,000 for TTS ( per agency)
  • 1,00,000 for tourist guides licensed at the Regional or State level

5. Free Tourist Visa to 5 Lakh Tourists

The first 5 lakh tourist visas to India will be free of cost, costing the government Rs 100 crore. This Benefit will be available only once per tourist and the scheme will be applicable till 31st March 2022 or till 5,00,000 visas are issued, whichever is earlier.

6. Extension of Schemes

6.1 Atmanirbhar Bharat Rozgar Yojana

The Atmanirbhar Bharat Rozgar Yojana had launched for the creation of new employment, restoration of loss of employment through EPFO but owing to a pandemic, Scheme extended from 30.6.2021 to 31.03.2022.

6.2 Pradhan Mantri Gareeb Kalyan Anna Yojana

PMGKAY was launched on 26th March 2020 to ameliorate the hardships faced by the poor due to economic disruption caused by COVID 19 Pandemic. However, keeping in view the need for continuous support to the poor and the needy, the scheme was relaunched in May 2021 to ensure food security of poor/vulnerable

Under Pradhan Mantri Gareeb Kalyan Anna Yojana, 5 kg of food grains will be provided free of cost to NFSA beneficiaries from May to November this year.

7. Credit Guarantee Scheme for Public Health

The new scheme focused on short-term emergency preparedness with special emphasis on children and pediatric care/pediatric beds.

The total amount of Rs 23,220 Cr earmarked for one year which shall include funding for short-term HR augmentation through medical students, increase the availability of ICU beds, oxygen supply at central, district, and subdistrict level.

8. Booster for the Insurance Sector

In order to boost the insurance sector, it has decided to induce Rs. 88,000 crores and Rs. 33,000 crores in Export Credit Guarantee Corporation and National Export Insurance Account respectively.

9. Extension of Tenure of PLI Scheme for Large Scale Electronics Manufacturing

Tenure of the PLI Scheme launched in 2020-21 has been proposed to be extended by one year i.e. till 2025-26 for those companies which have been unable to achieve incremental sales condition due to disruption in production activities due to pandemic related lockdowns, restrictions on the movement of personnel, delay in installation of relocated plant and machinery and disruption in the supply chain of components.

The Participating companies will get the option of choosing any five years for meeting their production targets under the scheme and the Investments made in 2020-21 will continue to be counted as eligible investments.

10. New Streamlined Process for PPP Projects and Asset Monetization

With an aim to ensure speedy clearance of projects to facilitate the private sector’s efficiencies in financing construction and management of infrastructure, New policy will be formulated for appraisal and approval of Public-Private Partnership (PPP) proposals and monetization of core infrastructure assets, including through InvITs

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