New Delhi: In a bid to soften the blow of demonetisation effects, Prime Minister Narendra Modi on Saturday night announced a host of sops for rural and urban poor, middle class, women and senior citizens while sending out a tough message that law will come down with “full force” against the “dishonest”.
Addressing the nation at the end of the 50-day period post surprise decision to ban 500 and 1000 rupee notes, he did not set out any roadmap for withdrawal of the cash curbs in banks but made it clear that his attempt was to restore normalcy as fast as possible in the new year.
In what looked like a mini-Budget speech, the Prime Minister announced that loans of up to Rs 9 lakh taken in the new year under two new schemes of Pradhan Mantri Awas Yojana will receive interest subvention of 4 per cent and loan of up to Rs 12 lakh will get a 3 per cent interest waiver.
For rural areas, the number of houses being built for poor will be increased by 33 per cent. In addition, another scheme is being put in place for neo middle and middle class in rural areas where loans up to Rs 2 lakh for new housing or extension will receive an interest subvention of 3 per cent.
Farmers will get 60 days waiver from payment of interest on crop loan taken for the winter rabi sowing and those who have already paid will get back the money in their accounts.
They will get even better access to loans from cooperative societies with the government adding Rs 20,000 crore to the Rs 21,000 crore fund created by NABARD last month.
He said the government has enhanced the limit of underwriting of loans given by banks to small business from Rs 1 crore to Rs 2 crore. Banks and NBFCs will not levy high interest as the government is bearing the cost of underwriting them.
In a bid to help senior citizens, who often bear the brunt of banks reducing their deposit rates, Modi announced that they will receive fixed rate of 8 per cent for 10 years on deposits up to Rs 7.5 lakh, which will be paid monthly.
The government is introducing a nationwide scheme for financial assistance to pregnant women wherein Rs 6000 will be transferred directly to their bank accounts. This will cover women who undergo institutional delivery and vaccinate their children.
Thanking the people for their firm resolve and infinite patience in facing difficulties with a smile and a concept of sacrifice, he said Indians have displayed the strength of people power, utmost discipline and the ability to discern the truth in a storm of disinformation.
“My effort is to take the banking system to normalcy as fast as possible in the new year.,” he said.
Modi said what was done in India has no precedence globally and added that over last 10 to 12 years, 500 and 1000 currency notes were used less for legitimate transactions and more for parallel economy.
In an apparent reference to seizure of new bank notes from bank officials and government servants, he said it is a bitter truth that people have complaints of bad experiences at the hands of Government machinery, and some government officers.
He appealed to the bank flush with currency to move beyond their traditional priorities, and keep the poor, the lower middle class, and the middle class at the focus of their activities.
Talking of the farm sector, Modi said an impression was sought to be created that the agriculture sector has been destroyed.
“Farmers themselves have given a fitting reply to those who were doing so. Rabi sowing is up by 6 per cent compared to last year. Fertiliser offtake is up by 9 per cent.
“During this period, the Government has taken care to ensure that farmers do not suffer for want of access to seeds, fertilisers and credit,” he said.
The Government, he said, has decided to give RuPay debit cards within three months to the 3 crore farmers currently having Kisan Credit Cards.
Modi said the government decision to underwrite loans of up to Rs 2 crore instead of previous Rs 1 crore for small businesses will enable better access to credit for small shop-owners and small enterprises.
Government has also asked banks to raise the credit limit for small industry from 20 per cent of turnover to 25 per cent.
Also, banks have been asked to increase working capital loans from 20 per cent of turnover to 30 per cent, for enterprises that transact digitally.
To boost digital payments, tax liability of business with turnover of upto Rs 2 crore will be reduced by 25 per cent to the extent they do digital transactions.
Some key points from Modi’s address
lTwo new schemes under Pradhan Mantri Awas Yojana to provide 4% interest waiver on loan of up to Rs 9 lakh and of 3% on loan up to Rs 12 lakh.
lFor rural areas, number of houses being built for poor will be increased by 33 per cent.
l3% interest waiver on loan up to Rs 2 lakh for construction of houses in rural India.
lGovernment to pay interest for 60 days on loans taken by farmers for rabi season from district cooperative banks and primary societies.
lGovernment to stand guarantee for loans up to Rs 2 crore from current Rs 1 crore, to small businesses.
l8% interest rate will be guaranteed on deposits of up to Rs 7.5 lakh for 10 years for senior citizens; interest will be paid monthly.
lRs 6,000 to be put into accounts of pregnant women in 650 districts for vaccination and other medical use
Banks have been asked to raise cash credit limit to small business to 25% from 20%.
lTax liability of business with turnover of up to Rs 2 crore will be reduced by 25 per cent to the extent they do digital transactions.