Govt. rolls out ₹1.19 lakh crore stimulus


Atmanirbhar Bharat Abhiyan 3.0 includes scheme to incentivise job creation, re-employment

Finance Minister Nirmala Sitharaman announced a fresh set of relief and stimulus measures for the economy worth ₹1.19 lakh crore, including a scheme to boost re-employment chances of formal sector employees who lost their jobs amid the COVID-19 pandemic.


  • The measures, announced after the Reserve Bank of India (RBI) said the country had entered into a technical recession in the first half of 2020-21, include a ₹65,000 crore additional outlay for providing fertilizer subsidies to farmers.
  • Finance Minister said the economy’s rebound as per recent indicators was not just driven by pent-up demand but reflected strong economic growth.
  • The RBI’s report predicts a strong return to proper growth for the economy, and there could be strong growth in the third quarter itself that could bring us to positive terrain.
  • The expectation earlier was that growth would be seen in fourth quarter, but the RBI feels it could happen as early as Q3, even ratings agency Moody’s Investor Service had revised its GDP projections for India upwards.
  • The measures included the production-linked incentive scheme for 10 sectors with a proposed expenditure of ₹1.46 lakh crore over five years, announced on Wednesday.
  • The other measures add up to a proposed outgo of ₹1,19,100 crore. Experts pegged the fiscal cost of Thursday’s announcement at about 1.2% of the GDP, if the PLI scheme was included. 
  • Finance Minister allocated ₹900 crore for research and development towards the COVID-19 vaccine, and said the government was ready to provide for the actual cost of the vaccine and the logistics for its distribution. 


  • To spur rural employment, an additional ₹10,000 crore has been provided for spending through the MGNREGS and PM’s rural roads scheme. Effectively, this takes the total allocations for MGNREGA in the year close to ₹1.1 lakh crore, with Finance Minister stating that ₹73,504 crore had already been spent to generate 251 crore person days of employment.


  • Mahatma Gandhi Employment Guarantee Act 2005 (or, NREGA No 42, later renamed as the "Mahatma Gandhi National Rural Employment Guarantee Act" or MGNREGA), is an Indian labour law and social security measure that aims to guarantee the 'right to work'.
  • This act was passed in September 2005 under the UPA government of Prime Minister Dr. Manmohan Singh.
  • It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
  • The act was first proposed in 1991 by P.V. Narasimha Rao. It was finally accepted in the parliament and commenced implementation in 625 districts of India. 
  • Based on this pilot experience, NREGA was scoped up to cover all the districts of India from 1 April 2008. The statute is hailed by the government as "the largest and most ambitious social security and public works programme in the world”. 
  • In its World Development Report 2014, the World Bank termed it a "stellar example of rural development”.
  • The MGNREGA was initiated with the objective of "enhancing livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year, to every household whose adult members volunteer to do unskilled manual work".
  • Another aim of MGNREGA is to create durable assets (such as roads, canals, ponds and wells). Employment is to be provided within 5 km of an applicant's residence, and minimum wages are to be paid. 
  • If work is not provided within 15 days of applying, applicants are entitled to an unemployment allowance. That is, if the government fails to provide employment, it has to provide certain unemployment allowances to those people. Thus, employment under MGNREGA is a legal entitlement.
  • MGNREGA is to be implemented mainly by gram panchayats (GPs). The involvement of contractors is banned.
  • Apart from providing economic security and creating rural assets, NREGA can help in protecting the environmentempowering rural women, reducing rural-urban migration and fostering social equity, among others.
  • The law provides many safeguards to promote its effective management and implementation. 
  • The act explicitly mentions the principles and agencies for implementation, list of allowed works, financing pattern, monitoring and evaluation, and most importantly the detailed measures to ensure transparency and accountability.
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