The new relief package will improve the availability of credit to industries

- Feelings of frustration in the business world as no financial relief is announced directly in the package

Prime Minister Nirmala Sitaram announced some more relief measures last week. The measures have been announced with the aim of helping various sectors to cope with the adversity caused by the epidemic. Cowid's cases have also come down in most of the states in the country and have led state governments to ease restrictions on movement and other activities. As a result, economic activity has improved but there has been uncertainty for traders. If the infection grows again, the process of economic recovery may be hampered. In this regard, the latest package focuses on improving the availability of credit to various sectors and industries.

The government will increase loan guarantees of Rs 1.1 lakh crore for cavid-affected areas. In the field of health, it can be used to develop health infrastructure outside the eight major cities. The interest rate for such loans is capped at 7.5 per cent. Hospitals and other service providers should be encouraged to increase capacity due to lower interest rates and it is expected that the above guarantee will also encourage lenders to lend to such people.

Apart from this, in the health sector, the government has spent Rs. 2.50 crore. This is a good step and will contribute to the children's ability to take care of themselves.

The government has increased the total limit of the emergency credit line guarantee scheme announced last year by Rs 1.5 lakh crore. Under this scheme so far Rs. 2.5 lakh crore loan has been given. This will help small businesses increase working capital to resume or expand their operations. Expanding Rs. Loans up to Rs 1.5 lakh will be guaranteed by the government.

Extensive expansion of loans and guarantees and lower interest rates will help businesses in these difficult times. But those hoping for financial relief to improve demand will be disappointed. These declarations have good intentions but do not seem to change that. It is clear that like last year, the government's focus is on providing relief, not on increasing demand through direct government spending. The pressure on the exchequer will increase when the epidemic is not over and revenue is not expected to improve.

The finance minister also mentioned other policy measures such as public-private partnership projects and the process of asset monetization, production-linked incentives for electronics manufacturing, expansion of broadband and new plans for the power sector.

Most of these initiatives will work for a fixed period of time and will not have an immediate effect. Sustainable economic recovery in this situation depends on how decisively the epidemic can be prevented by increasing the speed of vaccination. Overall, most of the relief in this package is in the form of loan guarantee. Not that direct financial relief. Due to this, the industry has been in turmoil.