Finance Minister Nirmala Sitharaman addressing press conference on May 13, outlined the first tranche of the contours of India’s massive Rs 20 lakh crore fiscal stimulus announced by Prime Minister Narendra Modi.
FM Sitharaman said the announcements will be made in tranches. Today's tranche will include measures as follows: 6 are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 for discoms, 1 for contractors, 1 for real estate sector, and 3 tax measures.
The financial stimulus announced by PM Modi is almost 10 percent of India’s gross domestic product (GDP) and comes as the country battles the economic effects of the coronavirus pandemic.
This Rs 20 lakh crore figure, however, includes the previous Rs 1.7 lakh crore stimulus package announced by Finance Minister Nirmala Sitharaman and steps taken by the Reserve Bank of India (RBI) since lockdown began on March 24 midnight. These earlier measures now together account to Rs 7.79 lakh crore of the complete package.
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BK Goenka, Chairman, Welspun Group:
I appreciate the reform-driven approach for Aatma Nirbhar Bharat. Today's tranche of announcement by Finance Minister on collateral-free loans, liquidity boosting measures & several beneficial schemes for MSMEs, NBFCs & DISCOMs are steps in right direction amid COVID crisis.
Amar Ambani, Senior President and Head of Research – Institutional Equities, YES Securities:
The package announced by the finance minister is effectively designed to be impactful, yet not burden government finances.The policy has been crafted largely around liquidity needs of employees, MSME and NBFCs.Market will eagerly await for announcements around land reforms, labour and law in the coming days. Collateral free loans for MSMEs with a full credit guarantee by the government will be highly fruitful.
Pradeep Mittal, Executive Vice Chairman, Essar Power:
A key aspect of Modi government's mega stimulus package is to use the resources to drive fundamental, grassroots level change. Earlier, too, attempts have been made to restructure discoms. In this instance, the government has made equity infusion contingent on improvement in operational performance. This will force states and discoms to improve infrastructure and collection efficiency. This is not a giveaway package; this is a lever of structural change.
Shishir Baijal, Chairman & Managing Director, Knight Frank India:
Today’s announcement by the Finance Minister was eagerly awaited by the real estate sector hoping to receive a new lease of life mostly from challenges emanating from liquidity and demand challenge. To enhance liquidity support and to assuage risk concerns a further expansion of partial credit guarantee scheme for the NBFC/ HFCs has been provisioned. This will hopefully enthuse lenders to look at the sector favorably. On the lockdown related impact on labour shortage and construction delays, extension of registration and completion date of real estate projects under RERA by 6 months will provide some relief to the sector. We now await to hear the subsequent announcements, that could resurrect demand and also boost Infrastructure sector, to make a complete assessment of the impact on the real estate sector.
Rajnish Kumar, Chairman, State Bank of India:
The policy bouquet unveiled by the Government is well-structured, suitably targeted, within reasonable fiscal limits but still having the maximum impact. The measures for MSME through guarantees, equity infusion and debt support will incentivize bank lending to MSMEs as well as providing crucial support to stressed entities in the current situation. The proposed definitional change for MSME sector based on turnover is progressive and is perfectly synchronized with the GSTN framework. It is time that we now implement this legislation. The envisaged support of full credit guarantees to the lower rated NBFC and HFC entities will restore stability in financial markets and could act as a clear enabling factor for compressing credit spreads. The steps for real estate sector, postponement of tax returns and reduction of TDS are also important policy milestones that have been announced today
Kerala Finance Minister Thomas Isaac:
If the first day's package of Union FM is a fair sample the Rs 20 lakh stimulus is going to be deeply disappointing. The actual outflow resources directly from the budget is only around Rs 30,000. At least the interest payment of MSME sector during the moratorium could be waved.
Kiran Mazumdar Shaw, Executive Chairperson of Biocon Ltd:
With such a generous stimulus package we can’t afford ‘business as usual’. Let’s leverage this to deliver nonlinear growth. Half the regulations must go. Laws must be changed and digital platforms must be used for transparency n governance. Trust deficit with Pvt sector must go.
Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research:
Given the liquidity challenges in NBFCs and MFIs, the special liquidity scheme for Rs. 30,000 Cr which will invest in investment grade papers of NBFCs/HFC/MFIs backed by a government guarantee is a big positive.
Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research:
The collateral free loans to small businesses up to an aggregate amount of Rs. 3 lakh Cr will be completely guaranteed by the government and importantly, have a longer tenor of 4 years with a moratorium in the first year. Such an emergency credit line will go a long way to fund the working capital required to restart the MSME’s operations, protect against any job losses and also address the challenge of credit aversion being seen in lenders.
Union Minister Nitin Gadkari:
Historic steps by government towards Atmanirbhar Bharat by strengthening the MSMEs which are the backbone of the country’s economy.
Union Minister Smriti Irani:
Grateful to PM Narendra Modi Ji and FM Nirmala Sitharaman Ji for announcing comprehensive measures for MSMEs/Real Estate/NBFCs.These announcements will provide required financial support & handholding and contribute towards building a self-reliant Nation.
MSMEs are the backbone of our economy. Measures announced today including modification in definition of MSMEs will help these enterprises meet operational liabilities, provide equity support and support in expanding their size as well as capacity.
B Gopkumar, MD & CEO, Axis Securities:
Part 1 of the mega stimulus package announced today has clear intentions of restarting the broader economy. The package announced today, amounting to Rs 6 lac crores, will provide the much-needed relief to SMEs and MSMEs. NBFCs and MFI also will benefit. The stimulus is also fiscally prudent as it does not involve major cash outlays as that would have stretched the system. This is a starter package for booting up the economy, we can expect more on the demand front. The series of announcements should keep markets in positive mode.
Rashmi Saluja, Executive Chairperson, Religare Enterprises Ltd:
We welcome the Rs. 20 lakh crore- stimulus package announced by the Central Government. It is a step in the right direction to spur growth as we look towards making India self-reliant with focus on land, labour, liquidity and laws.
For NBFCs, the INR 45,000 crore Partial Credit Guarantee Scheme 2.0 will be a game changer for the sector. As AA rated and unrated papers will all be eligible under the scheme, it will ease the funding pressure from the NBFCs, HFCs and MFIs and help develop funding sources. Moreover, the INR 30,000 crore Special Liquidity Scheme including investment grade debt papers and fully guaranteed by the Govt. is another breather for the NBFC sector.
With the announcement of special measures and credit guarantee schemes for MSMEs, the Govt. has ensured the de-stressing and revival of India’s engines of growth. Overall, all the measures will help the NBFCs in providing the lending support to the MSMEs in these difficult times and contribute towards the long term vision of building India as an economic powerhouse
Chief Economic Adviser Krishnamurthy Subramanian to CNBC-TV18:
As long as liquidity gets to firms that need it, it doesn't matter if it comes from the RBI or the government. India's measures are a mix of monetary and fiscal measures, relative proportions not important. Measures announced today cover healthy and stressed MSMEs. Measures for MSMEs are comprehensive, cover debt, subordinate debt and equity.
Strongly-rated borrowers not in as tough a spot as lower-rated borrowers. MSMEs often suffer from stress because of lack of equity which makes debt problematic.Equity cushion for MSMEs will mean a better credit rating & borrowing opportunities. Measures not only work to save MSMEs, but also save jobs this sector generates.
RK Gurumurthy, Head – Treasury, Lakshmi Vilas Bank:
Following a massive economic relief package announcement by the Prime Minister last night, the Finance Minister announced the first tranche of economic package that aims predominantly to address the economic woes faced by MSMEs and NBFCs.
Today’s package, the first in various tranches, will go a long way in resuscitating a section of the smaller and medium sectors of manufacturers that have been devastatingly affected by COVID-19 pandemic. These measures will also provide a strong base for the Make In India or the Aatmanirbhar initiatives.
Prime Minister Narendra Modi tweets:
Today’s announcements by FM Sitharamanwill go a long way in addressing issues faced by businesses, especially MSMEs.The steps announced will boost liquidity, empower the entrepreneurs and strengthen their competitive spirit.
Union Home Minister Amit Shah:
I thank PMNarendra Modi and FM Nirmala Sitharaman for these unprecedented steps, targeted at assisting MSMEs, cope with challenges of COVID-19. It reflects PM Modi’s commitment to revive our economy, help small businesses and boost employment.
Modi govt’s decision to provide ₹3 lakh cr collateral-free Automatic Loans to businesses, including MSMEs, will surely help them meet their operational liabilities, built up due to COVID-19 and resume their business. About 45 lakh units and employees will benefit from this step.
Niranjan Hiranandani -National President - NAREDCO:
Industry is pegging a big hope on much awaited fiscal relief to be granted to the second largest employment generating sector. Liquidity infusion will be imperative to turn around the depressed scenario of the sector.
The other announcement which is positive for real estate is the announcement of INR 30,000 crore special liquidity scheme for Non-Banking Finance Companies (NBFCs) and Home Finance Companies (HFCs) and Micro Finance Institutions (MFIs). NBFCs and HFCs are major sources of credit for real estate, the impact should be easing of the liquidity crisis, especially for stressed players.
Niranjan Hiranandani -National President - NAREDCO:
The first set of announcements made by Finance Minister Nirmala Sitharaman adds up to almost Rs 6 lakh crore; the announcements today missed fiscal stimulus for real estate. The announcement related to the regulatory aspect; of extension of dates under RERA by allowing ‘force majeure’ with the Urban Development Ministry issuing advisories to states and UTs to treat the COVID-19 period as an 'Act of God'. In terms of actual implementation, fresh project registration certificates can be issued as also, registration and completion dates extended ‘suo moto’ for up to six months. This is indeed a move to combat COVID disruption which practically brought construction work to a grinding halt with additional chaos of migrant labourer’s movement and raw material supply disruption. Relaxation in project timelines under RERA Act will bring in sigh of relief to the developers and safeguard the interest of homebuyers with the revised new timelines for their dream home deliverables. This ensures homebuyers trust in the project and grants breather to the developer’s fraternity for coping up with backlogged work due to natural disaster delays.
Former Finance Minister P Chidambaram:
On the credit guarantee fund, it is not the entire Fund that will be actually spent. The expenditure will be limited to the extent of NPAs in the outstanding guaranteed credit to MSMEs.
Former Finance Minister P Chidambaram:
We welcome the offer of subordinate debt (Rs 20,000 crore) and equity corpus fund (Rs 10,000 crore), but we will await the ‘terms and conditions’. The devil is in the detail.
Former Finance Minister P Chidambaram:
The FM announced some support measures for MSMEs, although my comment is the measures were skewed in favour of the larger MSMEs (about 45 lakh MSMEs). I think the bulk of the 6.3 crore MSMEs were left high and dry.
Former Finance Minister P Chidambaram:
There is nothing for the lakhs of poor, hungry and devastated migrant workers who have walked and many thousands are still walking back to their home states. This is a cruel blow dealt to those who toil every day. There is also nothing by way of cash transfer to the bottom half of the population (13 crore families) who have been pushed into destitution. Only yesterday, Prof Thomas Pikketty pleaded for cash transfers to the poor.
NITI Aayog CEO Amitabh Kant to CNBC-TV18:
Game changer is the new definition of MSMEs. Today's package is comprehensive as far as MSMEs are concerned. This package should help in getting over huge risk aversion by banks.
Suvodeep Rakshit, Vice President & Sr. Economist, Kotak Institutional Equities |
The fiscal measures announced draws strongly upon the aim of providing liquidity and easing the functioning of key sectors. While fiscal cost is muted, it provides essential liquidity to MSMEs, NBFCs, MFIs, and HFCs. The first instalment of the fiscal measures will provide support to these sectors and could likely stave off few potential financial sector dislocations.
Sharad Mittal, CEO, Motilal Oswal Real Estate Fund
|The FM has announced a suo moto relief of 6 months for the RERA completion timelines for all projects in all states with an additional window of 3 months that can be granted by the individual state authorities. Considering that projects are likely to be delayed by at least 4 to 6 months due to the lockdown, this is a welcome move for all real estate developers. However, it does not address the larger liquidity and cashflows related challenges faced by the developers
FM Sitharaman LIVE |
Rs 50,000-crore equity infusion through Fund of Funds for MSMEs.The Fund of Funds will be set up with a corpus of Rs 10,000 crore.
I-T return filing: FM Nirmala Sitharaman extends due date to November 30
Finance Minister Nirmala Sitharaman, on May 13, announced that the due date of all income-tax return for FY 2019-20 would be extended to November 30, 2020 from July 31, 2020 and October 31, 2020 .... Read More
Stimulus Package |
The rupee appreciated by 5 paise to 75.46 against the US dollar on Wednesday as fiscal stimulus by the government bolstered investor sentiment.Forex traders said Prime Minister Narendra Modi's Rs 20 lakh crore economic stimulus package enthused investors.However, risk sentiments are negative and investor sentiments remain fragile over coronavirus concerns, they added.
At the interbank foreign exchange, the rupee opened on a strong note at 75.31 but lost most of its gains in day trade.
Stimulus Package |
Snapping a two-session losing streak, the BSE Sensex vaulted 637 points on May 13as investors cheered the government's Rs 20 lakh crore stimulus package for the coronavirus-hit economy.After rallying 1,474.36 points during the day, the 30-share benchmark surrendered some gains to settle 637.49 points or 2.03 per cent higher at 32,008.61.Similarly, the NSE Nifty jumped 187 points, or 2.03 per cent, to finish at 9,383.55.
Indices retreated from intra-day highs as participants awaited details of the stimulus package from the finance minister, traders said.
- PTI
Here are 6 measures for MSMEs announced by FM Nirmala Sitharaman
During his address to the nation on May 12, PM Narendra Modi had announced a stimulus package totaling Rs 20 lakh crore to rescue the economy reeling under the impact of coronavirus.... Read More
FM Sitharaman LIVE |
All pending refunds of charitable trust, non-profit business, cooperatives and small partnerships, shall be issued immediately. Due date of all I-T returns for FY19-20 from July 31, 2020 and October 31, 2020 extended till November 31, 2020. Tax audits extended from September 30, 2020 till October 31, 2020. Date of assessments getting barred as of September 2020 is extended till December 2020. Those getting barred on March 31, 2021 are being extended till September 31, 2021. Vivad se Vishwas scheme is being extended till December 31, 2020 without any additional amount:Sitharaman
FM Sitharaman LIVE |
Reduced TDS and TCS rates by 25 percent. This is applicable on all payments - interest, rent, brokerage, supply, etc. This will be enforced from tomorrow till March 31, 2021. This reduction will release Rs 50,000 crore in hands of people: Sitharaman
FM Sitharaman LIVE |
For real estate sector - the Urban Development Ministry shall issue advisories to states and UTs to treat the COVID-19 period as an 'Act of God' and thus allow force majeure. Thus, fresh project registration certificates can be issued and, registration and completion date can be extended suo moto for up to six months for projects registered on or after March 25, 2020: Sitharaman
FM Sitharaman LIVE |
For contractors. All GoI agencies, such as Railways, highways or central public works, will give three to six months extension to all contractors without extra costs. This will cover construction work and goods and services contracts, completion of works and intermediate milestones, and also concessional period in PPP contracts. To facilitate greater liquidity, government agencies will partially release bank guarantees to the extent of the completed contract so that cash flow improves: Sitharaman
FM Sitharaman LIVE |
For discoms facing unprecedented cash flow problems, unable to pay gencos. To help them a one-time emergency liquidity infusion of Rs 90,000 crore via PFC and REC is provided. This will be a state issued guarantee and rebate will be provided to thosediscomsthat pass benefit to end-customer: Sitharaman
FM Sitharaman LIVE |
For NBFCs, HFCs and MFIs - Rs 45,000 liquidity infusion through partial guarantee scheme. Will cover commercial papers and borrowings. First 20 percent loss will be borne by guarantor - GOI. Double AA rated paper and unrated papers will all be eligible: Sitharaman
FM Sitharaman LIVE |
For NBFCs, HFCs and MFIs - it was felt NBFCs were not getting resources. We are launching Rs 30,000 crore special liquidity scheme where government will buy investment grade debt papers of NBFCs, HFCs and MFIs - not high quality only. These securities will be fully guaranteed by GoI. We hope that these NBFCs - which do not have high quality debt papers, can then support the MSMEs dependent on them: Sitharaman
FM Sitharaman LIVE |
To increase take-home salaries for those not covered in EPF benefit, the statutory PF contribution is being reduced from 12 percent to 10 percent. For state PSUs - the employers will continue to pay 12 percent, employees will get option to pay 10 percent for the next three months: Sitharaman
FM Sitharaman LIVE |
EPF relief for all establishments with Rs 2,500 crore liquidity support. GoI will provide both employer and employee - 12% contributions. Extending support for another three months from March-May 2020 to June-August 2020 as well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will benefit: Sitharaman
FM Sitharaman LIVE |
Sixth step for MSMEs is that post COVID, since trade fairs and exhibitions will be difficult, we will provide e-market facilities. GoI and CPMEs where there are receivables - all will be cleared within 45 days: Sitharaman
FM Sitharaman LIVE |
Next step for MSMEs, global tenders in government procurement will be disallowed for up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these big projects. Small units can be part of government purchases and now Self-reliant India can Make in India: Sitharaman
FM Sitharaman LIVE |
Definition being changed for MSMEs in their benefit. So that they can grow in size and get benefits. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorised similarly: Sitharaman
FM Sitharaman LIVE |
Funds of fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable. Corpus of Rs 10,000 crore - through mother fund and daughter fund we will provide support. This will help expand capacities and help them get listed in markets of choosing: Sitharaman
FM Sitharaman LIVE |
Rs 20,000 crore will be infused through subordinate debt for stressed MSMEs who have equity problems. This liquidity line will benefit 2 lakh MSMEs. All NPA' or stressed MSMEsare eligible for scheme.Government will provide Rs 4,000 crore to CGTMSE who will provide partial guarantee to banks who will then give benefit to stressed MSMEs: Sitharaman
FM Sitharaman LIVE |
For standard MSMEs, collateral free automatic loans worth Rs 3 lakh crore will be provided. This is for 4 year tenure and is 100 percent guaranteed. No principal repayment for 12 months.This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs: Sitharaman
FM Sitharaman LIVE |
Today's tranche has 14 different measures. Of these, 6are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 fordiscoms, 1 forcontractors, 1 for real estate sector, and 3 tax measures: Sitharaman
FM Sitharaman LIVE |
Beginnning today, I shall come with this entire team before you to put out details of PM's vision. We willl come with tranches beginning today. We have responsibility towards poor, needy, migrant and divyang (differently-abled): Sitharaman
