The central government on Monday announced eight economic relief measures. Following this, the former finance minister P. Chidambaram slammed the government saying that more credit means more debt.
Chidambaram Calls Credit, More Debt in Tweet
Former Finance Minister, P. Chidambaram took to Twitter to criticize the government for the eight economic relief measures. He said that giving out more credits means there will be more debts. And the businesses or banks that are running low on cash don’t need more debts, they need credit capital. Which, however, does not mean more demand.
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Chidambaram further added that this on the contrary means that more demand will be triggered with more supply. And the demands cannot grow in an economy where people have lost their jobs. And the incomes or wages have been reduced.
He further added that the solution to this crisis is to add more money in the hands of the poor and the lower middle classes.
Some elementary truths:
Credit guarantee is not credit
Credit is more debt. No banker will lend to a debt-ridden business
Debt-burdened or cash-starved businesses do not want more credit, they need non-credit capital
— P. Chidambaram (@PChidambaram_IN) June 29, 2021
Finance Minister Announces Eight Economic Relief Measures
Finance Minister Nirmala Sitharaman recently announced eight economic relief measures. They are as follows :
- Loan Guarantee Scheme for Sectors affected by Covid 19
In this, a total of Rs 50,000 crores is allocated to the health sector in bettering the health infrastructure and Rs 60,000 crores is allocated for the other sectors. The maximum loan amount is Rs 100 crore for the health sector with an interest rate of 7.95 percent.
- Emergency Credit Line Guarantee Scheme (ECLGS)
It is the part of the Aatmanirbhar Bharat Package that has been extended by Rs 1.5 lakh crore.
- New Credit Guarantee Scheme
It is launched to provide loans to the small borrowers via Micro Finance Institutions and the maximum loan for individuals is set at Rs 1.25 lakh with an interest rate below 2 percent.
- Scheme To Revive Tourism
Under this, financial assistance will be provided to more than 11,000 registered tourist guides and Travel & Tourism Stakeholders. A loan up to Rs 10 lakh will be provided while the licenses Tourist Guides will get up to Rs 1 lakh loan.
Once tourist visa issuance is resumed, the first 5 lakh tourist visas will be issued for free.
- Aatmanirbhar Bharat Rozgar Yojana
The scheme was launched to incentivise job creation. It has now been extended till March 31, 2022.
- Production Linked Incentive Scheme
This incentivizes large-scale electronics manufacturing in India. It has been extended by one year till 2025-2026.
- Reform based Result Linked Power Distribution Scheme
Under this, a total of Rs 3.03 lakh crore has been allocated for power infrastructure creation and up gradation.
- New Process for PPP Project
It consists of “Appraisal, Approval, and Monetization” for speedy clearances. It is to bring the private sector towards efficiency and streamlining multi-approval processes.
