The past track record has been so pitiable that the markets nurtured no hopes this time around. That explains why when the FM started speaking, the markets actually tanked further by over 400 points.

The address as usual, in English and Hindi began with the listing down of the progress made under the Atmanirbhar Bharat 1.0 and then 2.0. And then after this progress report, we waited for the stimulus, calling it Atmanirbhar 3.0.

As the FM said that this will come “12 different things” the market reduced its losses a bit, down by around 375 points.

Though the market did not give up its losses after the announcement, this stimulus was more on a broader scale for giving support to the economy. It was much more focused and giving this added weight to the ECLGS and the realty sector – one of the biggest employment and growth generator.  Each of these initiatives will help the troubled sectors revive. With demand coming up, this stimulus will help companies, as well as MSMEs and SMEs kickstart their growth.

Maybe we were looking at a bazooka type of stimulus to come, where huge amount of money is spewed all across. But this is much better as we can see that more thought has gone into each of these initiatives and while its tempting to announce a bazooka stimulus, the Govt has done right by keeping an eye on fiscal deficit too.

The market might not have too many takeaways from this stimulus to really react as such but the fact is that, in the long run, this stimulus of today and the ones announced earlier, along with RBI measures will help India rebuild slowly.

1: Aatmanirbhar Bharat Rozgar Yojana to incentivize creation of new jobs. It will be effective from Oct. 1, 2020, for the next two years.

Under this, it will benefit:

• Any new employee joining employment in EPFO registered establishments on monthly wages less than Rs 15,000
• EPF members drawing monthly wages of less than Rs 15,000 who exited from employment during the Covid-19 pandemic from March 1 to Sept. 30 and is employed after Oct. 1.
• Companies with more than 1000 employees – Govt to pay employees 12% contribution
• Companies with less than 1000 employees – Govt to pay both, employer as well as employee contribution of 12% each.

2: Extension of Emergency Credit Line Guarantee Scheme (ECLGS) till 31st March, 2021.

• Credit Guarantee Support for 26 stressed sectors identified by Kamath Committee plus healthcare
• Tenor of additional credit under this ECLGS 2.0 to be 5 years, including 1-year moratorium on principal repayment.

• Companies with credit outstanding of Rs 50 crore to Rs 500 crore will be eligible
• No upper ceiling on annual turnover

3: Production-Linked Incentive (PLI) scheme announced yesterday now extended to ten key sectors, including telecom, automobiles and pharmaceuticals

• The ten sectors – Advanced cell chemistry battery, electronic/technology products, Automobiles and auto components, Pharmaceutical & drugs, Telecom and networking, textile, Food Products, High efficiency Solar PV modules, White Goods (ACs and LEDs) and Specialty steel.
• To boost employment creation and growth

4: PM Awaas Yojana Urban

• Additional Rs 18,000 crore to be provided for housing scheme.
• Provisions to be made via additional allocation and extra-budgetary resources.

5: Benefit to construction and infra

• Performance security on contracts in the construction/infrastructure sector reduced to 3% v/s 5-10%
• Benefit to be available for all dispute free projects.
• Will also be extended to PSUs
• Earnest Money Deposit (EMD) will not be required for bid tenders and will be replaced by Bid Security Declaration.
• Relaxations till December 31, 2021
• Will give relief to contractors by reducing locking up of capital

6: Developers and homebuyers get IT benefit

• Income Tax relief increased from 10% to 20% of differential between circle rate (ready reckoner rate) and agreement value.
• Applicable on primary sale of residential units of value up to Rs 2 crore

7: Equity Infusion in NIFF

• Govt to infuse Rs 6,000 crore of equity in debt platform of National Infrastructure Investment Fund (NIIF).
• This will help NIIF raise Rs 1.1 lakh crore by 2025 for financing infrastructure projects.
• Private equity participation to also come in; NIIF has itself invested Rs 2,000 crore

8: Fertiliser subsidy

• To provide Rs 65,000 crore fertilizer subsidy to farmers.

9: PM Garib Kalyan Rozgar Yojana

• Additional outlay of Rs. 10,000 crore to be provided under this scheme
• Funds can be used for MGNREGA or for Gram Sadak Yojana, will help accelerate the rural economy.

10: Boost for exports

• EXIM Bank to get Rs.3000 crore for for promotion of project exports through line of credit (LoC) under IDEAS scheme.
• About 811 export contracts amounting to $10.50 billion being financed under LoCs.

11: Capital and Industrial Stimulus

• Additional Rs 10,200 crore being provided towards capital and industrial expenditure
• Amount to be spent towards domestic defence equipment, industrial incentives, industrial infrastructure, and green energy.

12: R&D grant

• Govt announces Rs 900 crore R&D grant for COVID-19 vaccine development. 
• Provision being made only towards research activity
• Actual cost of vaccine and logistics required for distributing the vaccine is different, and will be provided