From credit guarantee scheme to employment support, govt mulls stimulus for stressed sectors

New Delhi: The government is finalising a fresh set of stimulus measures for key stressed sectors such as hospitality, retail, aviation and tourism that have been hit hard by the Covid-19 pandemic. The key element of the package, which could be announced soon, is a credit guarantee scheme on the lines of the one offered to the micro, small and medium enterprises (MSME) sector, said government officials aware of the deliberations.

It may also have some targeted measures to spur spending in these sectors, ensuring that they get debt relief coupled with a demand push. The package being worked out could also include support for employment generation by taking over the burden of provident fund contributions for new hires.

“Measures are being worked out,” a top government official said.


Most of these steps are likely to be in the form of direct support from the budget. Collateral-free loans will be offered to entities from the services sector to aid them during the recovery period. “Funding for the scheme won’t be an issue,” another official said.

Meetings over the Next 2 Days
The government had announced a ₹3 lakh crore emergency credit guarantee scheme for the MSME sector as part of a ₹20 lakh crore relief package in May.

The plan to support provident fund contributions for new hires is being examined by the labour and finance ministries as part of the effort to encourage job generation in urban centres that have seen a fall in employment. The details are being drawn up, the second official said.

Meetings will be held over the next two days to finalise these steps, said one of the officials cited above.

The government is keen to unveil these measures during the festive season to support the uptick in demand seen in recent months.

Experts have said the October consumption spike was due to pent-up demand and the trend may not be sustained after the festive season is over.

Finance minister Nirmala Sitharaman had on October 12 announced schemes for government employees aimed at encouraging them to spend on goods. The leave travel allowance scheme was also made available to the private sector. Additional capital expenditure of ₹25,000 crore in the current financial year was also announced, taking the total stimulus to over ₹ 1 lakh crore.

The government had announced the Pradhan Mantri Garib Kalyan Yojana to provide free foodgrain and cash payments to women, poor senior citizens and farmers. The ₹20 lakh crore Atmanirbhar package also included key reforms for farm sector.