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How many of the benefits announced under COVID-19 Central relief Package are new?

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The Finance Minister announced a Rs. 1.7 lakh crore package to help the poor & vulnerable tide over the lockdown crisis due to COVID-19. A slew of measures was announced under this package. How many of these measures are new and how many are existing benefits?

In the wake of the spread of COVID-19 in India, the government of India had announced a nation-wide lockdown, effective from the midnight of 24 March 2020, for a period of 21 days which was later extended to 03 May 2020. It is now extended for two more weeks with certain relaxations.

COVID-19 Central relief Package_Lockdown extension after May 3

One of the key influencing factors for this decision making is the economic situation. The nation-wide lockdown has brought the whole nation to a stand-still with little or no economic activity. This economic situation has affected people from different walks of life.

COVID-19 Central relief Package_UN note that vulnerable Indians need help

Respective state governments have announced various measures to help poor & vulnerable citizens during the turbulent times. Factly has earlier written a story on this.  Similarly, even the central government has also announced measures during the lockdown.

One of the key measures was the relief package announced by Finance Minister, Nirmala Sitharaman for those impacted by the lockdown. We take a look at this relief package and ascertain, if these are new benefits that the government has announced specific to the lockdown.

Rs. 1.7 lakh crore relief package announced by the Centre

On 26 March 2020, the Union Minister of Finance, Ms. Nirmala Sitharaman announced a relief package worth Rs.1.7 lakh crores to aid the poor during the lockdown due to COVID-19. This package was announced under the Pradhan Mantri Garib Kalyan Yojana.

COVID-19 Central relief Package_Pradhan Mantri Garib Kalyan Yojana

The key relief measures & assistance announced as part of this package include the following.

COVID-19 Central relief Package_Pradhan Mantri Garib Kalyan Yojana key measures

The relief measures announced in this package are meant to address the needs of the various marginalized sections. Few of the already existing schemes are leveraged to transfer benefits announced under the relief package. However, it has to be noted that some of these measures are not fresh & specific measures, but are existing schemes recalibrated to provide relief.

We take a look at each of these relief measures in detail.  

New Insurance scheme for health workers fighting COVID-19

In context of COVID-19, the government has announced a new Special insurance Scheme specifically for the health workers engaged in fighting COVID-19 duties.  They include – Safai karmacharis, ward-boys, nurses, ASHA workers, paramedics, technicians, doctors and other specialists who are in COVID-19 duties.

The highlights include:

  • Any health care professional who dies accidentally while on COVID-19 duty would be compensated with an amount of Rs. 50 lakh i.e. the benefit from the scheme is triggered only in the case of death.
  • Approximately 22 lakh health workers would be covered under this scheme.
  • The insurance scheme is valid for 90 days, effective from 30 March 2020.

This scheme is totally a new one and tailor made in respect to COVID-19. MOHFW has released the relevant guidelines for this insurance scheme.

Although the initial announcement has particularly specified healthcare workers in Government hospitals and Health Care centres, the detailed guidelines issued also included those working in Private facilities and who are in COVID-19 duty.

COVID-19 Central relief Package_relevant guidelines for this insurance scheme

Not all the Cash transfer benefits announced in the Relief Package are new ones

As part of the Pradhan Mantri Garib Kalyan Package, there are different cash benefits announced by the government. The beneficiaries include – farmers, women, widows and others.

Rs. 2000 benefit extended to farmers is not a new one

The centre has announced the first instalment of Rs. 2000 to be paid under PM Kisan Yojana for 2020-21 would be moved forward to be paid out in April 2020. The first instalment was due between April and July which has now been paid in April.  The government estimates that 8.7 crores farmers would be benefitted by this.

PM Kisan Yojana is an existing scheme under which, the farmers who are the beneficiaries listed under this scheme are entitled for an annual amount of Rs. 6000 which is paid out in three instalments every 4 months.

Hence, this not a new benefit being announced to the farmers. The first instalment is being paid early in the wake of COVID-19. These farmers would have eventually received Rs.2000 irrespective COVID-19. The overall benefit announced by centre for this comes up to approximately Rs. 17.4 thousand crores.

Rs. 500 per month to women holding Jan Dhan accounts

Women are one of the most effected and vulnerable sections of the population during the lockdown.  As a part of the relief package, central government has announced ex-gratia of Rs. 500 to women account holders under PM Jan Dan Yojana. This would be provided for a period of three months, i.e. a total amount of Rs.1500 per account holder.  The government estimates a total of 20.4 crores beneficiaries for this cash benefit totalling to Rs. 31 thousand crores. This is a new and additional benefit announced by the centre.

COVID-19 Central relief Package_Pradhan Mantri Garib Kalyan Yojana Cash Transfers

Cash support to Senior Citizens, widows and physically disabled

Another cash benefit announced as part of the relief package is Rs.1000 to be paid to senior citizens (above 60 years of age), widows and the people under Divyang category i.e. physically disabled. The government has estimated that there are around Rs. 3 crore such aged, widows and people under Divyang category.  The amount of Rs.1,000 is the overall payment for the next three months.

This is a new benefit announced and not related to any existing scheme and the amount of Rs.1000 would be paid out in two instalments of Rs. 500 each. As per the estimated number of beneficiaries, this comes to around Rs. 3 thousand crores.

Payment into PF account for low wage earners

Wage earners who earn less that Rs.15,000 per month are eligible for a cash transfer into their PF accounts.  The caveat here is that they ought to be employed with businesses whose workforce is less than 100 with 90 % of the employees having salary less than Rs.15,000 per month. The stated intent by the government is to support those who are at the risk of losing employment.

The proposition by the government is to pay 24% of the monthly wages into the PF accounts for next three months. Government has allocated Rs.5 thousand crores for this.

Further in respect to EPF, government has announced that it will make amendments to include ‘Pandemic’ as one of the reasons to allow for non-refundable advance of 75% of amount or three months wages (whichever is lower) from their PF accounts. About 4 crore workers who are registered under EPF can take benefit from this.

Increase in MNREGA wages from 01 April 2020

Under PM Garib Kalyan Yojana, Centre has announced that MNREGA wages would be increased to Rs. 202 from Rs. 182 per day, i.e. an increase by Rs.20.  As per the statement, it would be an annual benefit of Rs. 2000 per year per beneficiary provided they are given 100 days of employment.  Approximately 13.62 crores families may benefit from this measure.

However, any amount received through MNREGA would be based on the work done and Rs.2000 additional benefit per year is assuming that the families work for 100 days.  The government has not highlighted how it plans to provide work under MNREGA especially during the lockdown.  

State Governments directed to utilize amount available in Construction workers welfare funds for aiding construction workers

Construction workers are directly impacted by the lockdown. They also forma a major portion of the migrant Labour. To provide relief for them, during this period, the Centre has directed the State governments to utilize the funds available under Welfare Fund for Building and Other Constructions Workers.

This is an existing fund which is constituted under The Building & Other Construction Workers Act,1996. Furthermore, as per The Building and Other Construction Workers Welfare Cess Act, 1996, cess can be levied and collected to provide funds for the Building & Other construction Workers welfare boards in the aforementioned act.

The government states that there are around 3.5 crores registered workers under this fund. Prior to the announcement of this relief package, Labour Ministry has issued an advisory on 24 March, to the State governments to use the Cess Fund for the welfare of Construction workers. About Rs. 52 thousand crores are available in the fund. In her announcement, the Finance Minister has stated that it would advise the states to use Rs. 31 thousand crores from the fund.

COVID-19 Central relief Package_Welfare Fund for Building and Other Constructions Workers

Furthermore, the government has also directed the State Governments to utilize the funds available under District Mineral Fund for purpose of developing facilities for medical testing, screening and others for preventing the spread of COVID-19.  The details of the amount allocated under this has not been provided by the government.

Provision of Rice & Pulses and other non-cash benefits announced

Additional Food Grain & Pulses provided free of cost

As per the National Food Security Act, the beneficiaries are entitled to Rs.5 kgs of grain per person every month.  As per the relief package announced by the government, the beneficiaries would be receiving an additional 5 kgs of grain (Rice /wheat) and 1 kg of pulses for a period of three months without any additional cost. Nearly 80 crore individuals are expected to benefit from this. The government has allocated Rs.45 thousand crores for this.

Gas cylinders free of Cost

8 crore poor families can receive Gas cylinder free of cost for three months. The beneficiaries under Pradhan Mantri Ujjwala Yojana would be receiving three cylinders during the period April-June 2020.  This would cost the government around Rs.13 thousand crores.

Increase in ceiling on lending in SHGs

There are around 63 lakh Self Help Groups (SHGs) in the country that support 6.85 crore households. As part of the COVID-19 relief package, government has increased the limit on the collateral free lending to Rs.20 lakhs from the earlier limit of Rs.10 lakhs.  However, this does not have any bearing on the cost incurred by the Central Government due to this package.

Only about 1 lakh crores of the 1.7 lakh crores new benefits

As highlighted through the story, few of the relief measures announced as part of PM Garib Kalyan Yojana as a COVID-19 relief measure are newly announced by the government, while few of them are already existing benefits.

The new benefits announced by the Governments come to around Rs. 1 lakh crores.

COVID-19 Central relief Package_Actual relief amount

The total announced package by the Central government was Rs.1.7 lakh crores. The balance includes already existing benefits and funds.

  • Rs. 17 thousand crores under PM Kisan Yojana
  • Rs. 31 thousand from existing amount from Construction Workers Cess fund
  • The availability or extent of usage under District Mineral fund was not announced, but this could make up the balance.
  • Note that the increasing in ceiling of loans under SHG and the amendments made for EPF withdrawal does not have any cost bearing on the Centre.

Therefore, although the overall package announced by Centre is Rs.1.7 lakh crores , the actual worth of benefits specifically made as relief due to lockdown amounts to around 60% of the package announced.

Featured Image: New benefits of COVID-19 Central relief Package

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