The fiscal outgo for the Union Government towards the ₹20.97-lakh crore Aatmanirbhar Bharat Abhiyaan package, announced last week by the Finance Minister, will be about ₹3-lakh crore over two fiscals ― ₹1.8-lakh crore in fiscal 2021 and ₹1.17-lakh crore in fiscal 2022, according to an analysis by Brickwork Ratings (BWR).
The credit rating agency observed that banks and other financial institutions will have to do the heavy lifting under the package.
As per the analysis, majority of government support under the aforesaid package, which seeks to support the Indian economy in the fight against Covid-19, is in the form of guarantees and interest subventions.
It assessed that the government spending this fiscal under this package is expected to be less than 1 per cent of gross domestic product (GDP).
Rajat Bahl, Chief Ratings Officer, BWR, said, “Our study reveals over ₹11-lakh crore of fresh credit could be pumped into the domestic economy in the current fiscal under this package mainly by banks and other financial institutions (FIs).
“While the package in itself looks very promising for India Inc, the credit mechanism and guarantee structures are key to the package being effectively implemented on the ground.”
BWR said the Government of India (GoI) is expected to adequately capitalise public sector banks and FIs such as Power Finance Corporation (PFC), National Bank for Agriculture and Rural Development (NABARD) and the Small Industries Development Bank of India (SIDBI) to support their credit outlay for the current fiscal under this package.
The agency emphasised that it will monitor the implementation of the critical measures announced by the GoI and Reserve Bank of India (RBI) under this package and its impact on India Inc. BWR continues to keep under close surveillance all of its outstanding ratings and will take appropriate rating actions as and when necessary, it added.
Packages
Among the measures announced under the first tranche of the stimulus package are ₹3-lakh crore emergency working capital facility for businesses, including micro, small and medium enterprises (MSMEs), ₹20,000 crore subordinate debt for stressed MSMEs, ₹50,000 crore fund of funds for MSMEs, ₹30,000 crore special liquidity scheme for non-banking finance companies (NBFCs), ₹45,000 crore partial credit guarantee scheme for liabilities of NBFCs, and ₹90,000 crore liquidity injection for electricity distribution companies.
The measures under the second tranche include migrant workers to be given free food grain supply for two months (₹3,500 crore), street vendors to be given special credit facility (₹5,000 crore), credit linked subsidy scheme for middle income group housing (₹70,000 crore), and additional credit for farmers through kisan credit card (₹2-lakh crore).
The measures under the third tranche include agriculture infrastructure fund (₹1-lakh crore), fisheries sector (₹20,000 crore), food microenterprises (₹10,000 crore), Animal Husbandry Infrastructure Development Fund (₹15,000 crore), and promotion of herbal cultivation (₹4,000 crore).
The measures under the fourth tranche include a ₹40,000-crore increase in allocation for MGNREGS to provide employment boost. These measures, which were announced last week, were over and above the measures announced earlier by the government, including the ₹1.7-lakh crore relief package under the Pradhan Mantri Garib Kalyan Yojana for the poor, and RBI measures aggregating ₹8,01,603 crore.