PF subsidy extension, microfinance loans and tourism push—three bright spots in FM’s announcement

The eight measures that Union finance minister Nirmala Sitharaman spoke about in the press conference on Monday afternoon were targeted specifically to different sectors that have been hit hard by the pandemic. The focus of the government was to provide relief in these sectors with financial help and credit guarantee so that the flow of funds improves in these sectors.

Most of the fiscal support discussed on Monday was in the form of credit guarantees. One of the most important announcements made by the finance minister was the extension of the Atmanirbhar Bharat Rojgar Yojana. The Centre has decided to extend the scheme till 31 March 2022.  The scheme would perhaps provide the biggest boost to employment generation by subsidising provident fund payable to employees.

21.42 lakh beneficiaries

The finance minister informed that more than 21.42 lakh employees of 79,577 establishments have benefited from Atmanirbhar Bharat Rojgar Yojana.

The Centre would subsidise both employers’ and employees’ share of provident fund contribution, amounting to 24% of wages for entities having up to 1,000 employees. For companies with more than 1,000 employees, the Centre will provide subsidy for the employees’ share (12%). Only the workers who earn less than Rs 15,000 a month are eligible.

In a meeting on 9 December 2020, the Union cabinet approved a package of Rs 22,810 crore for the entire period up to FY23. Of this Rs 1,584 crore was for FY21 and the remaining Rs 21,226 crore for FY22 and FY23.

Funds for microfinance

Another announcement that is likely to benefit a section of the poor is the government’s guarantee for microfinance institutions (MFI) to raise loans.

MFIs lend to the poor and were facing a shortage of funds. This step would help them raise funds from banks for onward lending to the poor who are about to resume their tiny businesses and need funds. The target of this measure is the generation of 25 lakh loans.

To boost tourism

One of the sectors that were devastated by the pandemic and mobility restrictions was tourism. It has decimated the income of many tourist guides. In a bid to give the sector a push, the finance minister announced that free visa would be offered to the first 5 lakh tourists or till March 31, 2022, whichever is earlier.

To help the tourist guides, the government will guarantee loans up to Rs 10 lakh to each of the 10,700 guides. These guides are already registered with the Central and state governments. However, unregistered guides are not qualified to get any help.

The minister said that the loan would be more like personal loans and the individual would be free to decide the end use of the funds. These loans will not entail any processing fees.

Other topics that Sitharaman discussed included the free foodgrains delivery, boost for project exports, push for export insurance cover and broadband connection to villages of the country.