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Online Personal Finance Magazine
No beating about the bush.
Under the cash transfer part, the minister said that it will largely be based on direct benefit transfer (DBT) through which farmers, migrant workers, widows, pensioners amongst others will be provided relief.
For farmers, the first instalment of the Rs6,000 per year given under PM Kisan Yojana will be given at the beginning of the year itself. So Rs2,000 will be provided into the accounts of farmers, a move that will immediately benefit 8.69 crore farmers.
The Mahatma Gandhi National Rural Employment Gurantee Act (MNREGA) wages have also been increased from present Rs182 per day to Rs202. "As a result, we expect Rs20 per worker will be the additional income that will benefit 5 crore families," the minister said.
Ms Sitharaman also decided to provide cash into the account of three crore senior citizens to help them cope with the current crisis. Accordingly, one time amount of Rs1,000 will be provided in two instalments into their account.
Also, Ujjawala cooking gas connection holders, over eight crore women now, will get free LPG cylinders for the next three months.
The 63 lakh women Self help groups (SHGs), that benefits seven crore households, will be provided collateral free loans, under the Deen Dayal National Rural livelihood mission, of Rs20 lakh - double the existing amount of Rs10 lakh.
In yet another relief measure, the finance minister announced that the government would bear entire 24% EPF contribution of employer and employees for next three months. This support will be for employees of establishments that employ upto 100 employees and wages of 90% of their employees is less than Rs15,000 per month.
Moreover, about 3.5 crore registered building and construction workers would be provided assistance and support from the Rs31,000 crore welfare funds.
"We will be giving directions to the state governments to ensure that the fund can be utilised for helping those who are facing economic disruption as a result of this particular lockdown," the FM said.
The Centre has also requested the state governments to utilise the funds which are available under the district mineral fund for supplementing and augmenting all kinds of medical testing activities, screening activities, and also other requirements, which are so necessary now to fight the coronavirus and from preventing its spread.
While details on the financing of the package or the fiscal implication have not be provided, CARE Rating says, assuming that the entire Rs1.7 lakh crore is additional expenditure that is to be incurred over the budgeted expenditure for FY2021 (of Rs30.4 lakh crore) and the projected gross domestic product (GDP) is retained, the fiscal deficit would increase by 0.75% from the budget target of 3.5% to 4.3% of GDP.
"However, given that GDP growth for the year is expected to decline, the fiscal deficit would widen further. If this expenditure is to be met through additional market borrowings it would pressure bond market yields and thereby interest rates," the ratings agency says.