Agarwal Jetley & Co.

COVID-19, Highlights of Government of India’s financial package Part – II: Highlights of May 14, 2020

I. Economic measures for migrants

1. Change effected by Government/proposed change to be effected

There were three (3) economic reforms introduced with regard to migrants.

2. Date of applicability and period till when applicable.

Currently no date has been prescribed.

3. Brief synopsis of the change including prior position, change in position and effect of the change

(i) (a) Free food grain supply to migrant workers for two (2) months: In a relief to migrant workers; (b) launch of the National Portability Cards (One Nation One Ration Card) which can be used in any ration shop in any part of the country as migrants move from state to state; (c) The Government will provide five (5) kg/person of wheat or rice and one (1) kg/family of channa for non-Public Distribution System (PDS) card holders for two (2) months which is going to cost the national exchequer three thousand five hundred crore rupees (INR 3,500 crore). The older provisions with regard to supply will still be applicable.

(ii) Technology systems will be used for enabling migrants to access PDS (Ration) from any ‘Fair Price Shop’ in India by March 2021 as a part of One Nation One Ration Card. Approximately, eighty three per cent (83%) of the PDS population will be covered by the national portability by August 2020 and one hundred per cent (100%) will be achieved by March 2021.

iii) In order to employ the migrants workforce returning home, the Government has generated fourteen point six two crore (14.62 crore) person days of work till May 13, 2020 to help migrants find work who have returned to their home states. The FM also announced Affordable Rental Housing Complexes (ARHC) for migrant workers and urban poor. The Government will launch a scheme under Pradhan Mantri Awas Yojana (PMAY) for migrant labour and urban poor to provide ease of living at affordable rent by:

(a) Converting government funded housing in the cities into ARHC under Public Private Partnership (PPP) mode.

(b) Incentivizing manufacturing units, industries, institutions, and associations to develop ARHC on their private land.

4. Clarification required

Currently, no clarifications are required.

5. AJC viewpoint

The supply of free food grain to migrant workers for two (2) months would be specifically beneficial to those migrant labourers not covered under National Food Security Act or without a ration card in the State/UT in which they are stranded. The incentive taken under AHRC would help the Government in generating jobs. The creation of technology systems to enable migrants to access Ration from any Fair Price Shop in India will help a migrant worker and their family members to access PDS benefits from any Fair Price Shop in the country. This will ensure that the people in transit, especially migrant workers can also get the benefit of PDS benefit across the country.

II. Economic reforms for small traders

1. Change effected by Government/proposed change to be effected

There was one (1) economic reform introduced for small traders.

2. Date of applicability and period till when applicable.

Currently no date has been prescribed.

3. Brief synopsis of the change including prior position, change in position and effect of the change

The Government announced the following for small businesses under the MUDRA scheme, which have been disrupted the most due to the coronavirus, and, in turn, do not have the capacity to pay Easy Monthly Instalments’ (EMIs). These steps include:

(i) One thousand five hundred crore rupees (Rs. 1,500 crore) interest subvention for MUDRA-Shishu loan;

(ii) Loan moratorium has already been granted by Reserve Bank of India;

(iii) The current portfolio of MUDRA-Shishu loans is One point six two lakh crore rupees (Rs. 1.62 lakh crore) (max loan amount of fifty thousand rupees (Rs. 50,000);

(iv) Government of India will provide interest subvention of two per cent (2%) for prompt payees for twelve (12) months.

4. Clarification required

Currently, no clarifications are required.

5. AJC viewpoint

The proposed incentive will provide relief of about one thousand five hundred crore rupees (Rs. 1,500 crore) to Shishu MUDRA loanees.

III. Economic reforms for street vendors

1. Change effected by Government/proposed change to be effected

There was one (1) economic reform introduced for street vendors.

2. Date of applicability and period till when applicable.

Currently no date has been prescribed.

3. Brief synopsis of the change including prior position, change in position and effect of the change

For street vendors, the Government has announced the following measures:

(i) Five thousand crore rupees (Rs. 5,000 crore) special credit facility;

(ii) Government will launch a special scheme within a month to facilitate easy access to credit to street vendor;

(iii) Initial working capital would be up to ten thousand rupees (Rs. 10,000);

(iv) Digital payments will be incentivised through monetary rewards and enhanced working capital credit would be made available for good repayment behaviour;

4. Clarification required

Currently, no clarifications are required.

5. AJC viewpoint

According to the data provided by the Government, it is expected that fifty lakh (50 lakh) street vendors will be benefitted under this scheme and credit of five thousand crore rupees (Rs. 5,000 crore) would flow to them.

IV. Economic reforms for employment generation

1. Change effected by Government/proposed change to be effected

There were two (2) economic reforms introduced for employment generation.

2. Date of applicability and period till when applicable.

Currently no date has been prescribed.

3. Brief synopsis of the change including prior position, change in position and effect of the change

Employment creation through Compensatory Afforestation Fund Management and Planning Authority (CAMPA) funds: The Government has received proposals worth six thousand crore rupees (Rs. 6,000 crore) to help generate employment for tribals and adivasis for afforestation and plantation works, artificial regeneration etc.

For middle income group with the annual income ranging from six to eighteen lakh rupees (Rs. 6-18 lakh), the Government will give a seventy thousand crore rupees (Rs. 70,000 crore) boost to the housing sector through extension of Credit Linked Subsidy Scheme (CLSS) for Middle Income Group, which was operationalized from May 2017. CLSS was extended up to March 31, 2020.

4. Clarification required

Currently, no clarifications are required.

5. AJC viewpoint

The extension of CLSS for Middle Income Group will create significant number of jobs by giving boost to Housing sector and will stimulate demand for steel, cement, transport and other construction materials. The employment creation through CAMPA funds will create job opportunities in urban, semi-urban and rural areas and also for tribals and adivasis. Also, with the monsoon approaching, these projects are likely to kick off soon.

V. Economic reforms for small farmers

1. Change effected by Government/proposed change to be effected

There were two (2) economic reforms introduced for small farmers.

2. Date of applicability and period till when applicable.

Currently no date has been prescribed.

3. Brief synopsis of the change including prior position, change in position and effect of the change

The Government announced thirty thousand crore rupees (Rs. 30,000 crores) additional emergency working capital fund for farmers through NABARD. Rural cooperative banks are the main source for credit for the same. This will benefit small and marginal farmers. This will be over and above the ninety thousand crore rupees (Rs. 90,000 crores) provided by NABARD.

Two lakh crore rupees (Rs. 2 lakh crore) concessional credit boost to two point five crore (2.5 crore) farmers through Kisan Credit cards was also announced by the FM. A special drive is to be undertaken to provide concessional credit to farmers through Kisan credit cards. Fishermen and animal husbandry will also be included in the drive.

4. Clarification required

, no clarifications are required.

5. AJC viewpoint

The agricultural sector of India will incur major benefit from these incentives given by the Government and the impact of the lockdown due to COVID 19 will significantly lessen. The additional emergency working capital fund for farmers through NABARD will benefit around three crore (3 crore) farmers to meet post-harvest (Rabi) and correct Kharif requirements in May and June. The concessional credit boost to farmers through Kisan Credit cards will enable farmers to gain access to institutional credit at concessional interest rate benefiting two-point five crore (2.5 crore) families. They will benefit from credit flow of about two lakh crore rupees (Rs. 2 lakh crore).

VI. Revision of Labour Codes

1. Change effected by Government/proposed change to be effected

There were a few revisions of the labour codes introduced in order to benefit the workers.

2. Date of applicability and period till when applicable.

Currently no date has been prescribed.

3. Brief synopsis of the change including prior position, change in position and effect of the change

(a) Minimum wages

(i) Universalization of right of minimum wages and timely payment of wages to all workers including unorganized workers. Presently the minimum wages applicable to only thirty per cent (30%) of workers.

ii) Statutory concept of National Floor Wage introduced.

(iii) Fixation of minimum wages simplified.

(iv) Appointment letter for all workers.

(b) Health related schemes

(i) Annual Health Check-up for employees.

(ii) Occupational Safety and Health (OSH) Code also applicable to establishments engaged in work of hazardous nature even with threshold of less than ten (10) workers.

The definition of inter-state migrant worker has been modified to include migrant workers employed directly by the employer, workers directly coming to destination State on their own besides the migrant workers employed through a contractor.

(d) Employees' State Insurance (ESIC)

(i) Extension of ESIC coverage pan-India to all districts and all establishments employing ten (10) or more employees as against those in notified districts/areas only.

(ii) Extension of ESIC coverage to employees working in establishments with less than ten (10) employees on voluntary basis.

(iii) Mandatory ESIC coverage through notification by the Central Government for employees in hazardous industries with less than ten (10) employees.

(e) Social security incentives

(i) Social Security Scheme for Gig workers and Platform workers.

(ii) Re-skilling fund introduced for retrenched employees.

(iii) All occupations opened for women and permitted to work at night with safeguards.

(iv) Provision for Social Security Fund for unorganised workers.

(v) Gratuity for Fixed Tem Employment - Provision of gratuity on completion of one (1) year service as against five (5) years.

4. Clarification required

Currently, no clarifications are required.

5. AJC viewpoint

The changes in the minimum wages would help formalise their working capacity and status at the workplace. The National Floor Wage would help in reducing the regional disparity in minimum wages of the workers. Simplification in fixation of minimum wages would lead to less number of rates of minimum wages and better compliance. The provision of appointment letter for all workers, will promote formalization. The introduction of the health-related schemes would insure the health and safety of the workers. The modification in the definition of migrant workers would extend the portability of welfare benefits to more of the migrants. The scope of ESIC and social security benefits were extended and would provide more incentive for the workers to engage in employment and promote productivity.