India announces a $22 billion package including cash transfers to feed and serve the poor during the coronavirus lockdown

• The focus of the first set of announcements is to provide food and cash to the poorest of poor including farmers, unorganised labour, women, self-help groups., Finance Minister Nirmala Sitharaman said
• The scheme has been called Pradhan Mantri Gareeb Kalyan Yojana will be with immediate effect.
• The size of the entire package is ₹1.7 lakh crore, or over $22 billion, she added.
• Track the latest news and updates on the coronavirus pandemic on Business Insider India.

The Indian government led by Narendra Modi has announced a financial stimulus package of ₹1.7 lakh crore (over $22 billion), under the name of a scheme called the Pradhan Mantri Gareeb Kalyan Yojana, to cushion the Indian economy from the damning impact of the Coronavirus pandemic on the country's underprivileged and the poor, according to Reuters.

“The lockdown was announced by the Prime Minister on the intervening night of March 24 and March 25 and it has been in force since then. The government has been working for the poor, the migrants, the women etc. of the society since then. It’s only been 36 hours since the lockdown was announced. The package will take care of their food requirement, and several measures through direct benefit transfer are being taken to put money in their hands,” the Finance Minister Nirmala Sitharaman said.

However, she did not elaborate on the fiscal impact of the steps announced today or whether the government will fund these measures via additional government borrowing.

Watch the full video here:
Courtesy: Press Information Bureau

These are the highlights of the Finance Minister’s address on March 26:

1. The FM also announced a ₹50 lakh per person medical insurance cover for medical workers. “They are being called Gods in white costume,” she said lauding the efforts for everyone on the frontline including sanitation workers and paramedical staff, and Asha workers. This is targeted at 2 million individuals across the country.

All the money to be transfered via Direct Benefit Transfer:

2. Pradhan Mantri Gareeb Kalyan Anna Yojana: Supply of foodgrain, either rice or wheat, to be doubled, and to be offered free of cost, for the next three months. Currently, they get either 5 kilograms of rice/wheat and they can get another 5 kgs after today's announcement. Aside from that, the government will also offer 1 kg of the preferred pulse, or dal, will also be given to every household free. This can be taken in 2 instalments by every household from the ration shops.

3. Farmers: Kisan Samman Nidhi, currently at ₹6,000 a year, will be frontloaded. Farmers will get the first instalment of ₹2,000 ahead of schedule on April 1.

4. Mahatma Gandhi National Rural Employment Guarantee Scheme: The wage rate will be increased to ₹202 a day from ₹182 a day currently and this will continue after the lockdown ends. This will benefit about 5 crore people across the country, increasing their income by ₹2,000 a year.

5. An ex-gratia of ₹1000 in the next three months will be given to to 300 million poor senior citizens, poor widows and poor disabled. This will be given in two installments.

6. 200 million women with Jan Dhan account holders will get ₹500 a month for the next three months.

7. Ujjwala Scheme (The government scheme gave subsidised cooking cylinders to poor households): Nearly 83 million people availing this scheme will get free cooking gas cylinders for the next three months.

8. Women self-help groups: The next announcement will help 6.3 million such groups, benefitting 70 million households. The collateral-free loans, under Deen Dayal Yojana, will be doubled to ₹20 lakh from ₹10 lakh currently.

9. For all firms with up to 100 employees (if 90% of the staff who earn less than ₹15,000 a month): The government will bear the employees' provident fund contribution, on behalf both the employers and the employees, together amounting 24% of the salary, for the next three months.

10. The Employee Provident Fund scheme will be amended to allow non-refundable advance up to 75% of the existing corpus in the individual's account, or three months' wages, whichever is lower. This is expected to benefit 8 million employees across 4 lakh companies.

11. The welfare fund for construction workers has about 3.5 crore registered people and a corpus of ₹31,000 crore. Many construction projects have come to a halt because of the lockdown. The central government will direct state governments to use the existing corpus to help this segment of workers.

12. The state governments will be requested to use the District Mineral Fund for medical screening, medical testing at the district level.

This is a developing story and will be updated constantly. Keep refreshing the page.

Earlier in the day, Reuters reported that Sitharaman may announce a financial stimulus package of ₹1.5 trillion ($19.6 billion) today (Thursday). The CEO of government think tank NITI Aayog Amitabh Kant also batted for direct benefit transfer to those who lost their livelihoods due to the lockdown aimed at containing the virus.

The last time she spoke on March 24, Sitharaman announced some immediate steps to reduce the burden of compliance and taxation on individuals and businesses of all sizes. Since then, the nationwide 21-day lock has resulted in industries coming to a halt as they figure out the logistics and millions of migrant workers on the streets without a home or food.

This is what some of the excerpts had recommended:

The state’s first responsibility should be towards people who are at the margin and are going to lose their jobs, and should be able to provide them with a source of livelihood. And that should be in the form of a direct benefit transfer,” he said in a virtual interview with the Observer Research Foundation (ORF).

The former governor of RBI Raghuram Rajan said that it is hard to assess the economic impact of the pandemic. However, he said that the government needs to put medical supplies etc on priority as it heads to contain the virus. "We need to spend money on medical supplies, ventilators, masks — on getting protective equipment for medical workers. That means getting every resource in. pvt, public, defence, retired — every resource. And quickly. All this will require fiscal resources and this is the higher priority," Rajan said in a TV interview.

See also:
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Inside the $2 trillion US economic stimulus⁠— and what locked-down India can learn from it

Here's what India wants from Modi’s financial package

A look at Indian government response to coronavirus, so far, shows some quick reactions but not enough foresight