Lok Sabha Question No. 1111 (UNSTARRED), answered on 2021-02-08
Subject: Impact of Covid-19 Pandemic on Economy
Ministry: FINANCE
Asked by: Rahul Ramesh Shewale, Omprakash Bhupalsinh alias Pawan Rajenimbalkar

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1111

TO BE ANSWERED ON 08.02.2021

## IMPACT OF COVID-19 PANDEMIC ON ECONOMY

## 1111. SHRI RAHUL RAMESH SHEWALE:

SHRI OMPRAKASH BHUPALSINH alias PAWAN RAJENIMBALKAR:

Will the Minister of FINANCE be pleased to state:

- (a) the impact of Covid-19 pandemic on the economy of the country along with the present status thereof;
- (b) the extent to which demand depressed in various sectors particularly unorganized sector and unemployment rise in such sectors in economic slowdown due to Covid-19 pandemic in the country, sector-wise;
- (c) the contraction predicted by the Government/RBI in GDP during the financial years 2020-21, 2021-22 and 2022-23 due to the said pandemic; and
- (d) the steps taken/being taken by the Government to mitigate the impact of the pandemic on the economy along with achievements thereof ?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a), (b) & (c) As per the Estimates of Gross Domestic Product (GDP) for the First Quarter (Q1) of 2020-21 released by the National Statistical Office (NSO), Ministry of Statistics & Program Implementation (MoSPI), the real GDP in India contracted by 23.9 per cent during the first quarter of 2020-21 (as against 5.2 per cent growth in Q1 of 2019-20). India's GDP growth rose to (-) 7.5 percent YoY in Q2 (as against 4.4 per cent growth in Q2 of 2019-20), a sharp rebound from the pandemic induced decline in Q1.

As per the First advance estimates of GDP released by NSO, GDP growth is estimated to contract by 7.7 percent in 202021. Agriculture and allied sector is estimated to grow at 3.4 percent in 2020-21. This sector is set to cushion the shock of the COVID-19 pandemic on the Indian economy in 2020-21 that has contributed positively to the overall Gross Value Added (GVA). Industry and Services sector are estimated to contract by 9.6 per cent and 8.8 per cent respectively during the year 2020-21. Within Industry, Mining is estimated to contract by 12.4 per cent, Manufacturing by 9.4 percent and construction by 12.6 per cent. The utilities sector has shown a sharp recovery and is set to register a positive growth of 2.7 per cent in 202021. Within Services Sector, contact sensitive sectors like trade, hotels, transport & communication are estimated to contract by 21.4 per cent. According to RBI, India's GDP growth is estimated to contract by 7.5 percent in 2020-21 and grow by 10.5 percent in 2021-22.

The fundamentals of the economy remain strong as gradual scaling back of lockdowns, along with the astute support of AtmaNirbhar Bharat Mission has placed the economy firmly on the path of recovery. th

Net payroll data of Employees' Provident Fund Organisation (EPFO) as on 20 January, 2021 shows a net increase of new subscribers  in  EPFO  of  78.58  lakhs  in  2019-20  as  compared  to  61.1  lakhs  in  2018-19.  These  estimates  are  net  of  the members  newly  enrolled,  exited  and  re-joined  during  the  year  as  per  records  of  the  EPFO.  During  FY  2020-21  (AprilNovember), the net new EPF subscribers stood at 45.29 lakh.

(d)  In  FY  2020-21,  Government  announced  a  special  economic  and  comprehensive  package  under  AtmaNirbhar  Bharat including  measures  taken  by  RBI  amounting  to  about  Rs.  27.1  lakh  crores  -  more  than  13  per  cent  of  India's  GDP-  to combat the impact of the COVID-19 pandemic and to revive economic growth. The package included, among others, in-kind and cash transfer relief measures  for households, employment  provision measures  under  Pradhan  Mantri Garib Kalyan Rojgar  Abhiyaan  and  increased  allocation  under  MGNREGS,  credit  guarantee  and  equity  infusion-based  relief measures for MSMEs and NBFCs and regulatory and compliance measures. Structural reforms were also announced as part of the AtmaNirbhar Bharat Package which, inter alia, included deregulation of the agricultural sector, change in definition of MSMEs, new PSU policy, commercialization of coal mining, higher FDI limits in defence and space sector, development of Industrial  Land/  Land  Bank  and  Industrial Information  System,  revamp  of  Viability Gap Funding scheme  for  social infrastructure,  new  power  tariff  policy  and incentivizing  States  to  undertake  sector  reforms.  The  implementation  of  the package is reviewed and monitored regularly. Some of the salient achievements include:

-  Under Pradhan Mantri Garib Kalyan Package valued at Rs. 2.76 lakh crore, free food grain for 80 crore people, free cooking gas for 8 crore families, and direct cash transfer to over 40 crore farmers, women, elderly, the poor and the needy were provided.
-  As on 3 rd February, 2021, a total of 323.19 crore person-days have been generated in the current FY 2020-21 under MGNREGS.
-  Under  Pradhan  Mantri  Garib  Kalyan  Rojgar  Abhiyan,  50.78  crore  person-days  of  employment  was  generated incurring an expenditure of Rs. 39,293 crore.
-  Rs. 3 lakh crore Collateral-free Automatic Loans for Businesses, including MSMEs: Under Emergency Credit Line Guarantee Scheme (ECLGS) 1.0, Rs. 2.14 lakh crore has been sanctioned to 90.57 lakh borrowers of which Rs 1.65 lakh crore has been disbursed to 42.46 lakh borrowers as on 8 th January, 2021. Additionally, ECLGS has been

extended to 26 stressed sectors identified by the Kamath Committee and the healthcare sector till March, 2021 with operational guidelines issued on 26 th November for maintaining the momentum of credit disbursements to close to 45  lakh  business  units.  As  on  8 th January  2021,  additional  credit  amounting  to  Rs.  15,571  crore  has  been sanctioned to 2,772 borrowers under ECLGS 2.0, of which Rs. 3,344 crore has been disbursed to 1,188 borrowers.

-  Rs. 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs are being provided. Purchase of portfolio of Rs. 27,794 crore has been approved by PSBs and Rs. 1400 crore are currently in process of approval/negotiations as on 4 th December, 2020.
-  Rs. 30,000 crore Additional Emergency Working Capital Funding for farmers through NABARD is being provided. Rs.  25,000  crore  has  been  disbursed  so  far  as  on  4 th December,  2020.  Under  balance  Rs.  5000  crore  Special Liquidity Facility for smaller NBFCs and MFIs, Rs. 130 crore has been disbursed as on 4 th December, 2020.
-  Centre had enhanced the borrowing limit for the States from 3% to 5% of GSDP for FY2020-21. Under the Special Window provided by Central Government to borrow the shortfall arising out of GST implementation  on behalf of States, Government of India has borrowed an amount of Rs. 78,000 crores in 13 instalments, at an average interest rate of 4.75 per cent, and passed it on to the States and UTs as on 25 th January, 2021.
-  Rs. 50,000 crore liquidity through TDS/TCS rate reduction has been effected.

The Union Budget 2021-22 has also announced a number of measures to support broad-based and inclusive economic development under six pillars listed as under:

## i. Health and Wellbeing

Key measures include a holistic approach to strengthen healthcare with focus on three areas- Preventive, Curative, and Wellbeing,  Rs.  35,000  crore  for  COVID-19  vaccine,  roll  out  of  Made-in-India  Pneumococcal  Vaccine  across  the  country, launching  of  a  new  centrally  sponsored  scheme  PM  AtmaNirbhar  Swasth  Bharat  Yojana  in  addition  to  National  Health Mission, Mission Poshan 2.0, Universal Coverage of Water Supply, Urban Swachh Bharat Mission 2.0, Clean Air, Scrapping policy, etc.

## ii Physical & Financial Capital, and Infrastructure

Key measures include Production Linked Incentive scheme (PLI) in 13 Sectors, Mega Investment Textiles Parks (MITRA), 7 Textile Parks, expansion of National Infrastructure Pipeline (NIP) to 7,400 projects, creation of  institutional structures for Infrastructure  Financing,  National  Monetization  Pipeline,  sharp  increase  in  Capital  Budget,  economic  corridors,  flagship corridors/expressways, National Rail Plan for India (2030), future dedicated freight corridor projects, strengthening of urban infrastructure, launching of National Hydrogen Energy Mission 2021-22, extension of Ujjwala Scheme to cover 1 crore more beneficiaries,  development  of a world class Fin-Tech hub, increasing FDI limit in insurance sector from 49  percent to 74 percent, setting up of Asset Reconstruction Company Limited and Asset Management Company, recapitalization of PSBs easing  compliance  requirement  of  small  companies,  amendments  to  the  Deposit  Insurance  and  Credit  Guarantee Corporation (DICGC) Act, 1961, decriminalization of the Limited Liability Partnership (LLP) Act, 2008, promoting start-ups and innovators by incentivizing the incorporation of one person companies, strengthening NCLT framework, new policy for Strategic  Disinvestment,  Government  Financial  Reforms  such  as  universal  application  of  Treasury  Single  Account  (TSA) System, rationalization of Centrally Sponsored Schemes, development of Multi-State Cooperatives, etc.

## iii Inclusive Development for Aspirational India

Key  measures  include  ensuring  MSP  at  minimum  1.5  times  the  cost  of  production  across  all  commodities,  extension  of SWAMITVA Scheme to all States/UTs, enhancing agricultural credit and infrastructure funds, investments to develop modern fishing harbours and fish landing centres, One Nation One Ration Card, Rs. 15,700 crore budget allocation to MSME Sector, etc.

## iv Reinvigorating Human Capital

Key measures include qualitative strengthening of 15000 schools under National Education Policy, setting up of 100 new Sainik Schools, Higher Education Commission of India, Central University in Leh, 750 Eklavya model residential schools in tribal areas, revamped Post Matric Scholarship Scheme for welfare of SCs, measures to enhance skilling like realignment of existing National Apprenticeship Training Scheme (NATS), etc.

## v Innovation and R&D

Key measures include Rs. 50,000 crore outlay under National Research Foundation (NRF), Rs. 1,500 crore for financial incentives  to  promote  digital  modes  of  payment,  PSLV-CS51  launch,  Gaganyaan  mission  activities,  launching  of  Deep Ocean Mission, etc.

## vi Minimum Government and Maximum Governance

Key  measures  include  reforms  to  rationalize  the  functioning  of  Tribunals,  National  Commission  for  Allied  Healthcare Professionals Bill in Parliament to ensure transparent and efficient regulation of the 56 allied healthcare professions, National Nursing and Midwifery Commission Bill to bring transparency, efficiency and governance reforms in the nursing profession, setting up of a Conciliation Mechanism for quick resolution of contractual disputes, Rs. 3768 crores for India's first digital census, Rs.1000 crores for the welfare of tea workers especially women and their children in Assam and West Bengal, etc.