The Center plans a new recovery plan
Just days after the finance minister presented a budget that tilted towards increased spending, two government officials familiar with the development said new measures being discussed could include extending the duration of social protection schemes which should be completed in the coming months.
A more robust stimulus could also be considered later if the pandemic worsens, affecting the economy and livelihoods.
“The budget is an annual exercise, and that does not mean that additional support measures will not be taken. The government will take all necessary measures to strengthen growth throughout the year. When the budget for FY22 was presented, the general belief was that India would not see the second wave, but it happened, so a package was announced in June,” one of the officials said. cited above.
Questions sent to the Ministry of Finance remained unanswered until press time.
Over the past two years, the government has announced a series of measures to stimulate demand.
These range from increasing funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), introducing the Aatmanirbhar Bharat Rojgar Yojana (ABRY), Pradhan Mantri Garib Kalyan Yojana, and providing incentives for affordable housing.
The other official quoted above said that the period of several of these programs could be extended and that the MGNREGA funds would have increased further, depending on the covid curve.
ABRY was announced by the government during the first wave of the pandemic in 2020. Under this program, the government is helping companies to pool together in the employee provident fund to help reduce the burden on employers and the encourage the retention and hiring of workers.
In June 2021, the government extended the date of registration under ABRY from June 30 to March 31, 2022. The budget presented by Finance Minister Nirmala Sitharaman proposed to increase spending for ABRY by ₹3,130 crore (budget estimate) in 2021-2022 for ₹6,400 crores in FY23.
Another program to support the poor amid the pandemic is the Pradhan Mantri Garib Kalyan, under which the government provides 5 kg of wheat or rice and 1 kg of pulses per person per month.
The program ends in March this year.
In addition, the credit-linked subsidy program for middle-income groups for affordable housing is also set to end on March 31.
Other incentives to stimulate demand for affordable housing include the additional tax deduction of ₹1.5 lakh on interest paid on loans for the purchase of affordable houses.
The government is expected to consider extending the timing of these programs to stimulate consumer demand, the officials quoted above said.
Speaking at an industry event on Saturday on the MGNREGA scheme, Sitharaman said it was a demand-driven scheme and that the government would allocate more funds to it in the future. if necessary.
This follows the criticism of the attribution of ₹73,000 crores for the program in the latest budget, against a revised estimate of ₹98,000 crore for FY22.
Professor NR Bhanumurthy from the National Institute of Public Finance and Policy agreed that there would be more funds for MGNREGA whenever the need arises as the program is demand driven.
He said that with increased capital spending there would be long-term benefits for jobs and growth, adding that it was now up to states to support people through direct transfers of money. advantages.
The discussions mentioned above have arisen as the country faces the third wave of the covid pandemic.
However, no immediate announcement is expected, with the daily tally of infections starting to recede from recent highs.
In 2020, the stimulus measures came after the budget as the pandemic spread a few months after the budget was presented.
Similarly, in 2021, the government offered another round of stimulus in June, as the second wave faded after the budget was presented.
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