Tue, Jan 24, 2017 | updated 06:47 PM IST

PM Modi announces post-demonetisation sops

Updated: Dec 31, 2016 22:07 IST

New Delhi [India], Dec.31 (ANI): Announcing several post demonetisation sops for the poor, middle class, pregnant women, senior citizens and farmers in a televised address to the nation, Prime Minister Narendra Modi on Saturday said that two new middle income categories have been created under the Pradhan Mantri Awas Yojana in urban areas; loans of up to nine lakh rupees taken in 2017, will receive interest subvention of four per cent and loans of up to 12 lakh rupees taken in 2017, will receive a interest subvention of three per cent.

He said that the number of houses being built for the poor, under the Pradhan Mantri Awas Yojana in rural areas, is being increased by 33 per cent, adding that in addition to this, another scheme is being put in place for the neo middle and middle class in rural areas and loans of up to 2 lakh rupees taken in 2017, for new housing, or extension of housing in rural areas, will receive an interest subvention of three per cent.

Rejecting the impression that the agriculture sector has been destroyed as a result of demonetisation, Modi said in 43-minute-long address, "Farmers themselves have given a fitting reply to those who were doing so. Rabi sowing is up by six per cent compared to last year. Fertiliser off-take is up by nine 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. Now, we have taken some more decisions in the interest of farmers."

He further stated, "Farmers who have taken loans for the Rabi crop from district cooperative central banks and primary societies, will not have to pay interest on such loans for a period of 60 days. Farmers, who have paid interest during the last two months, will receive these amounts back, directly into their bank accounts."

He said that arrangements are being made to provide farmers even better access to loans from cooperative banks and societies.

"NABARD created a fund of 21,000 crore rupees last month. Now, the government is adding 20,000 crore rupees more to this. The loss that NABARD suffers by giving loans to cooperative banks and societies at low interest rates, shall be borne by the Government of India," he added.

"The government has decided that three crore farmers who have Kisan Credit Cards, will be given RuPay debit cards within three months. Kisan Credit Cards were launched in 1998, but so far, it was essential to go to a bank, to use them. Now, farmers will have RuPay Debit Cards, which they can use anywhere," he said.

"Just as agriculture is vital for the economy, so are the medium and small scale enterprises also called the MSME sector? The government has taken some decisions in the interest of small and medium businesses, which will also boost employment.

"Government of India underwrites loans given by banks to small businesses through a trust. So far, loans were covered up to one crore rupees. This limit is now being enhanced to two crore rupees. Earlier the scheme only covered bank loans. Hereafter it will cover loans given by NBFCs as well. This decision will enable better access to credit for small shop-owners and small enterprises. Banks and NBFCs will not levy high interest on these loans, as the Government of India is bearing the cost of underwriting them," he added.

He said that the government has also asked banks to raise the credit limit for small industry from 20 per cent of turnover to 25 per cent.

Banks have also been asked to increase working capital loans from 20 per cent of turnover to 30 per cent, for enterprises that transact digitally.

Many people connected with this sector have made cash deposits in the last few weeks. Banks have been asked to take this into account when deciding on working capital.

"A few days back, the government announced a major tax relief for small businesses. Income of businesses with turnover of up to Rs 2 crores was calculated at eight percent of the turnover. Now, for such businesses, income from digital transactions will be calculated at six percent. This will effectively reduce their tax liability by 25 percent," the Prime Minister said.

"The progress of the MUDRA Yojana has been very encouraging. Last year, nearly three-and-a-half crore people have benefited from this. The government now aims to double this, giving priority to Dalits, Tribals, Backward Classes and Women. A new scheme is being launched for pregnant women," he said.

"We are introducing a nation-wide scheme for financial assistance to pregnant women. 6000 rupees will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children. This scheme will help reduce the maternal mortality rate, in a big way. This will help ensure nutrition before and after delivery, and improve the health of mother and child. So far, pregnant women in 53 districts were being given financial assistance of 4000 rupees, under a pilot project," he added.

"We are initiating a scheme for senior citizens. Banks often reduce their deposit rates, when they receive a large volume of money. This should not adversely impact senior citizens. Under the scheme, senior citizens will receive a fixed interest rate of eight per cent for a period of ten years, on deposits up to 7.5 lakh rupees. The interest will be paid monthly.

PM Modi had last addressed the nation on November 8, when he suddenly abolished 500 and 1,000 rupee notes in a decision aimed at combating corruption and black or undeclared money.

The Prime Minister's move took out 86 per cent of the money in circulation and he had requested people to allow him 50 days to ease the cash crunch that followed, promising that the "short term pain" would be followed by long-term gain."

A deadline to exchange old notes at banks ended yesterday (Friday, December 30.)

As part of the demonetisation drive, how much money can be withdrawn from ATMs and banks will remain controlled for now. Starting tomorrow (January1), the daily limit on ATM withdrawals will go up to Rs. 4,500 rupees from Rs. 2,500, but the weekly cap on withdrawals from bank accounts stays capped at Rs. 24,000 rupees. The Reserve Bank of India has not indicated when the limits will be relaxed or removed.

The opposition united in attacking him for failing to anticipate how hard the notes ban would affect people, particularly in rural India where banks are tough to access.

While cash shortages have eased somewhat, bankers and analysts said the situation is far from normal and could last at least another six months. They said the move could hit economic growth and lead to job losses and a drop in demand for goods. The government has refuted these predictions. (ANI)