A day after Prime Minister Narendra Modi announced an economic stimulus package of Rs 20 lakh crore to shore up the economy battered by the COVID-19 outbreak, Finance Minister Nirmala Sitharaman on May 13 disclosed the blueprint of the mega package.
Today’s announcements (other measures will be announced over the next few days) were aimed at alleviating the stress in sectors such as micro, medium and small enterprises (MSMEs), power discoms and real estate.
The Finance Minister's announcements also aimed at improving the sagging morale of India's workforce, facing the brunt of a slowing economy and muted corporate earnings.
In today's announcement, the measures pertained to MSMEs; Employees' Provident Fund; non-banking finance companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs); discoms, real estate and three tax measures.
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This move, she said, will benefit 45 lakh small businesses. The loan will have a four year tenure and will offer a 12 month moratorium on interest payments.
Sitharaman said Rs 20,000 crore subordinate debt will be provided for stressed MSMEs, which would benefit two lakh businesses.
A Rs 50,000 crore fund of funds for MSME is being created, which will infuse equity in MSMEs with growth potentials.
The definition of MSMEs has been changed to allow units with investment up to Rs 1 crore to be called micro units instead of Rs 25 lakh at present. Similarly, units with a turnover up to Rs 5 crore will now be categorised as micro units, with a turnover based criteria being introduced to define small businesses.
To help MSMEs compete in government tenders, global tenders will be banned for government procurement up to Rs 200 crore.
Under the special liquidity scheme, investments will be made in both primary and secondary market transactions in investment-grade debt papers of these institutions, which will be fully guaranteed by the government.
Sitharaman said the partial credit guarantee scheme 2.0 (PCGS) will enable NBFCs, HFCs, and MFIs with low credit rating starved of liquidity to begin lending to MSMEs and individuals.25% cut in TDS/TCS rate for non-salary payments
The reduction, she said, would put nearly Rs 50,000 crore into the hands of people who would have otherwise paid it as TDS.Deadline to file ITRs extended till November 30
The direct tax dispute resolution -- Vivad Se Vishwas scheme – too has been extended by six months till December 31.
Sitharaman said the Income Tax Department will fast-track processing of pending refunds to charitable trusts, limited liability partnerships (LLPs), non-corporate businesses, proprietorship firms, among others.DISCOMS electrified
She said this covers construction works and goods and services contracts besides obligations like completion of work, immediate milestones etc and extension of concession period in contracts on public private partnership.To ease cash flows, government agencies will partially release bank guarantees, to the extent contracts are partially completed, she added.