Finance minister Nirmala Sitharaman on Thursday announced a new job creation scheme by giving subsidy to those establishments that make new hires.
Addressing a press conference to announce more stimulus measures to boost growth, she said the Indian economy is witnessing a strong recovery after a long and strict lockdown.
The subsidy would be to cover for retirement fund contributions by employees as well as employers for two years, she said.
Employees contribution (12 per cent of wages) and employer's contribution (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said.
Under the Aatmanirbhar Bharat Rozgar Yojana, every Employees' Provident Fund Organisation (EPFO) registered establishment taking new employees would get this subsidy.
The scheme will cover any new employee joining employment in EPFO-registered establishment on monthly wages less than Rs 15,000.
It would also cover EPF members drawing monthly wages of less than Rs 15,000, who made an exit from employment during COVID-19 pandemic from March 1, 2020 and is employed on or after October 1, 2020.
The scheme would cover establishments registered with EPFO if they add new employees compared to the reference base of employees as in September 2020.
The condition would be adding a minimum of two new employees for establishments with up to 50 employees. Those establishments with more than 50 employees, would have to give a minimum of five new jobs.
The scheme would be operational till June 30, 2021.
Tax relief on sale of housing units
Finance Minister also announced relaxations in income tax rules to allow sale of primary residential units of up to Rs 2 crore value below the circle rate.
Till now, only 10 per cent difference between the circle rate and the agreement value was allowed.
To boost residential real estate sector, she said the differential has now been increased to 20 per cent for period up to June 30, 2021 for only primary sale of residential units of value up to Rs 2 crore.
"This measure will reduce harships faced by both home-buyers and developers and help in clearing the unsold inventory," she said.
Rs 900 crore grant for COVID-19 vaccine research
A Rs 900 crore grant to the Department of Biotechnology for COVID-19 vaccine research was also announce by the finance minister.
She said the grant does not cover the actual cost of vaccine and distribution expenses, which will be made separately as and when the vaccine is available.
She also said that Rs 10,200 crore additional budget outlay will be provided towards capital and industrial expenditure for domestic defence equipment, industrial incentives and infrastructure and green energy.
Tax relief on some home deals; stimulus tops Rs 30 lakh cr
Finance Minister Nirmala Sitharaman on Thursday announced tax relief on select home sale deals, enhanced credit guarantee programme for small businesses and provide incentives for new job creation as the government widened stimulus measures to boost the economy.
The measures, that also include additional fertiliser subsidy and already announced production-linked inventive scheme for manufacturing units, totalled Rs 2.65 lakh crore, taking the cumulative stimulus package announced since the lockdown to almost Rs 30 lakh crore, or 15 per cent of the Gross Domestic Product (GDP).
It also includes additional funding for real estate developers and contractors, a new employment scheme and additional spending on the rural jobs plan.
Sitharaman cited data, including increase in tax collections for goods and services, rise in energy consumption and improvement in bank credit to state that the economy was seeing "strong recovery" taking root.
The Indian economy has recovered from its worst-ever contraction of 24 per cent in the April-June quarter but will end up shrinking by close to 10 per cent in the fiscal year to March 2021.
But she saw hope in the Reserve Bank of India predicting a strong likelihood of growth in the current quarter.
Doubling down on the previously announced measures, she said income tax law will be relaxed to allow primary or first sale of housing units of up to Rs 2 crore at a price that can be 20 per cent below the stamp duty circle rate.
Currently, the law restricts differential between circle rate and agreement value at 10 per cent, and "the move will help reduce hardships faced by both home-buyers and the developers and help clear unsold inventory," she said.
Under the new job creation scheme, the government will provide a subsidy equal to the contribution that an employee and the employer have to make towards the retirement fund (totaling 24 per cent of the wages) to establishments that hire new employees or re-hire those it fired during COVID-19 pandemic, she said.
The Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), under which small businesses can get collateral-free loans, has been extended till March 31, 2021.
The same has also been extended to 26 stressed sectors identified by a high-level committee as also the healthcare sector. The companies will get a one-year moratorium on loans and four more years to repay the amount, she said.
Sitharaman counted a production-linked incentive programme worth Rs 1.46 lakh crore for manufacturing units, already approved by the government, as part of the 12 support measures unveiled on Thursday.
In the past, Rs 51,355 crore of incentives has been provided for mobile manufacturing, drug intermediaries and manufacturing of medical devices and now automobiles, telecom, textile and food products, white goods, specialty steel and electronic products have been included.
An additional outlay of Rs 18,000 crore will be made towards the affordable urban housing programme, she said.
To provide higher liquidity to contracts, the government has decided to lower the earnest money deposit for projects till December 31, 2021.
Also, Rs 10,000 crore was provided for rural employment, Rs 3,000 crore to Exim Bank for extending lines of credit, Rs 10,200 crore additional budget outlay for defence and infrastructure.
A Rs 900 crore grant was made to the Department of Biotechnology for COVID-19 vaccine research, she said, adding this did not include the cost of procuring and distributing the vaccine which will be established later.
Sitharaman said the government will provide Rs 65,000 crore of additional subsidy on fertiliser to ensure the crop nutrient is available to farmers during the current season.
The measures are the government's latest efforts to boost the economy, which slipped into an unprecedented recession after gross domestic product probably declined for a second straight quarter in the three months ended September.
The Rs 29.87 lakh crore stimulus package, spread over five announcements over the past few months, includes Rs 12.71 lakh crore of liquidity boosting measures by the Reserve Bank of India (RBI).
The previous stimulus measures announced included free foodgrains and cooking gas to the poor and cash support to some.
The International Monetary Fund (IMF) has forecast that the Indian economy will shrink by 10.3 per cent in the year to March.
"Recovery (in economy) is happening," Sitharaman said, pointing to some high-frequency indicators.
"In the last 10-15 days, there have been quite a few steps and indicators which have shown the recovery is happening. The PMI has risen to 58.9 in October. This is the strongest increase in output in close to nine years. This shows that is not just pent up demand but a strong pitch for recovery," she said.
Further, Sitharaman said, "a total of 15 per cent of GDP is what is being given here as stimulus till today."
Prime Minister Narendra Modi has asserted that the "Aatmanirbhar Bharat" package announced on Thursday continues his government's efforts to help all sections of society.
In a tweet, he said these initiatives will help create jobs, alleviate the stressed sectors, ensure liquidity, boost manufacturing, energise the real estate sector and support farmers.