Union Finance Minister Nirmala Sitharaman on Wednesday addressed a presser detailing the whopping Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi on Tuesday, nearly 10 per cent of country’s GDP, for all segments including industries, workers, farmers, honest taxpayers, MSMEs, cottage industry among others.
The Prime Minister had announced the ‘Aatmanirbhar Bharat’ package that will focus on making India self-reliant amidst the Coronavirus pandemic and the subsequent weeks of lockdown.
Beginning the presser, Nirmala Sitharaman reiterated that the financial package announced by PM Modi essentially aims to “spur growth and build a very self-reliant India”.
She asserted that ‘Atmanirbhar’ (self-reliant) India does not imply “isolationism or becoming exclusionist”.
Before giving details of the stimulus package, the finance minister revisited some past schemes from PM Garib Kalyan Scheme to IBC and GST reforms.
“The Direct Benefit Transfer, Microinsurance schemes, PM Awas Yojana, PM Ujjwala Yojana, Swachh Bharat and Ayushman Bharat were all transformative reforms which have benefited the poor in a big way,” she said.
Further on, she said that starting today, she will hold daily pressers along with her teams to detail a number of responses the government has prepared to bring the economy back on track.
“Beginning today, I shall come with this entire team before you to put out details of PM’s vision. We will come with tranches beginning today. We have responsibility towards poor, needy, migrant and divyang (differently-abled),” Sitharaman said.
MSMEs
The finance minister began the details with relief for MSMEs.
Sitharaman announced that Rs 3 Lakh Crore will be made available for collateral free loan for those MSME units which have Rs 25 crore outstanding loan payments or Rs 100 crore turnover. These loans will be available with a 4-year tenure and a moratorium of 12 months. The move is expected to benefit 45 lakh units.
Government will provide stressed MSMEs with equity support, Sitharaman informed. Central government will facilitate the provision of Rs 20,000 Crores as subordinate debt, she added.
The minister further informed that the definition of MSMEs is being “changed for their advantage so that they can grow in size and get benefits”. “Investment limit which defined MSMEs have been revised upwards. Additional criteria being brought in is turnover size – earlier differentiation between manufacturing and service MSMEs will be categorised similarly,” she said.
With investment up to Rs 1 Crore and with turnover of up to Rs 5 Crore will now qualify to be Micro industries.
Finance Minister Nirmala Sitharaman also announced a corpus of Rs 10,000 crore though mother-fund and daughter-fund framework.
“For MSMEs needing handholding, a Rs 50,000 crore ‘fund of funds’ through ‘mother fund – daughter fund’ framework is being created, to expand their capacity and to get listed on markets which they choose,” Sitharaman said.
In a bid to help MSMEs further, Sitharaman said that global tenders will be disallowed in government procurement up to Rs 200 Crore.
“Unfair competition from foreign companies to become a thing of the past,” she added.
EPF support extended
To ease financial stress as businesses get back to work, Government has decided to continue EPF support for businesses and workers for three more months providing a liquidity relief of Rs 2,500 crore, informed Nirmala Sitharaman.
Under the Pradhan Mantri Garib Kalyan Package, payment of 12 per cent of employer and 12 per cent employee contributions was made into EPF accounts of eligible establishments.
Now, this support will be extended by another three months to salary months of June, July and August.
Statutory PF contribution slashed
In order to provide more take-home salary for employees and to give relief to employers in the payment of PF, EPF contribution is being reduced for businesses and workers for three months, amounting to a liquidity support of Rs 6,750 crores.
EPF contribution will reduced for businesses and workers for 3 months to 10 per cent from 12 per cent and will stay at 12 per cent for state-run firms.
Special liquidity scheme for NBFCs/HFCs/MFIs
Finance Minister Nirmala Sitharaman announced the launch of a Rs 30,000 Crore special liquidity scheme for NBFCs/HFCs/MFIs. Under this scheme, investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs.
Government has also announced Rs 45,000 crore liquidity infusion through a partial credit guarantee scheme 2.0 for NBFCs.
Liquidity injection for DISCOMs
To give a fillip to DISCOMs with plummeting revenue and facing an unprecedented cash flow problem amid the Coronavirus pandemic, the Government has announced Rs. 90,000 Crore liquidity injection for DISCOMs.
DISCOM payables to power generation and transmission companies is currently Rs 94,000 Crore.
Relief for contractors
In a major relief to contractors, all Central agencies are to provide an extension of up to 6 months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts, Nirmala Sitharaman said.
The Ministry of Housing and Urban Affairs has decided to advise States/UTs and their regulatory authorities to extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after March 25, 2020 without individual applications.
TDS and TCS rates cut by 25%
Addressing the media on the details of the Rs 20 Lakh Crore package, Sitharaman said the Government has planned to infuse Rs 50,000 Crore liquidity by reducing rates of TDS, for non-salaried specified payments made to residents, and rates of tax collection at source (TCS) for specified receipts, by 25 per cent of the existing rates.
This is in order to provide more funds at the disposal of the taxpayers.
This reduction will be applicable for the remaining part of the FY 2020-21 i.e. from tomorrow till March 31, 2021.
Due date of all I-T return for FY 2019-20 extended to Nov 30, 2020
Due date of all income-tax return for FY 2019-20 will be extended from 31 July, 2020 and 31 October, 2020 to 30 November, 2020 and Tax audit from 30 September, 2020 to 31 October, 2020.
The Rs 20 Lakh Crore economic package comes as India is set to go under lockdown 4.0 after May 17. However, according to the Prime Minister, this shutdown will be “very different” from the previous ones.