Finance Minister Nirmala Sitharaman announced on Wednesday the first set of relief measures under the government’s Atmanirbhar Bharat Abhiyan—India’s Rs 20 lakh crore Covid-19 economic package. Small businesses, non-bank lenders and power distribution companies formed the central agenda of today’s announcements.
Here are the key highlights:
- Collateral-free loans, backed by the central government, of up to Rs 3 lakh crore have been introduced for MSMEs.
- Up to Rs 20,000 crore liquidity support through subordinate debt for stressed MSMEs.
- A fund of funds of up to Rs 50,000 crore for equity support to MSMEs with growth potential.
- Definition of MSMEs has been revised.
- EPFO support provided by central government has been extended for another three months till August.
- A special liquidity scheme of up to Rs 30,000 crore has been announced for NBFCs, housing financiers and microfinanciers.
- Partial credit guarantee scheme for NBFCs has been expanded.
- Power distributor companies will be given a liquidity injection of Rs 90,000 crore to pay off their dues to power generation firms.
- Real estate developers allowed to invoke ‘force majeure’ clause and extend registration and completion dates by six months.
- Rates for tax deducted at source and tax collection at source have been reduced.
- Due date for filing income tax returns have been extended.
Read further for more details on each announcement.
Finance Minister said that a comprehensive vision for the economy was laid out after discussion with several sections of the society.
Inputs obtained were given due consideration while preparing the package for the country. Essentially the package is to spur growth, and make India self-reliant, Sitharaman said.
The Finance Minister said that the package addresses issues of ease of doing business, compliance and due diligence observed. The intention is to build brands, take local brands and take them to a global level.
Finance Minister tried to allay concerns of protectionism by India by saying that a self-reliant India does not mean the country will cut itself off from the world.
- Rs 52,606 crore transferred to 41 crore Jan Dhan bank account holders.
- Rs 18,000 crore worth grain and pulses distributed to ration cardholders.
In a major initiative Government announces Rs 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs. #AatmanirbharBharat pic.twitter.com/jgnWeKYrWs
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
To provide stressed MSMEs with equity support, Government will facilitate provision of Rs. 20,000 cr as subordinate debt. #AatmaNirbharBharatAbhiyan pic.twitter.com/zNxbJUawiK
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
The government will provide equity funding for MSMEs with growth potetial through a fund of funds with a corpus of Rs 50,000 crore.
The fund will be operated through a mother fund and a few daughter funds, Sitharaman said. This will help MSMEs expand in size and capacity. It will also encourage them to get listed, she said.
Unfair competetion from foreign companies to become a thing of the past; Global tenders to be disallowed in Government procurement upto Rs 200 crores#AatmaNirbharBharatAbhiyan #atmanirbharbharat pic.twitter.com/voj3hstdOR
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
The finance minister said that all MSME receivable from government-run firms will be paid off in 45 days.
The government has extended the EPF support of up to Rs 2,500 crore for another three months.
Under the PM Garib Kalyan Yojana, payment of 12 percent of employer and 12 percent employee contribution was made into the EPF accounts of eligible establishments. This support was offered till May.
Now the same is being extended for June, July and August.
In order to provide more take home salary for employees and to give relief to employers in payment of PF, EPF contribution is being reduced for Businesses & Workers for 3 months, amounting to a liquidity support of Rs 6750 crores. #AatmaNirbharBharatAbhiyan pic.twitter.com/VSysfvk4KU
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
The finance minister has announced a special liquidity scheme of up to Rs 30,000 crore for non-banking financial firms.
Under the scheme, investment will be made in both primary and secondary market transactions in investment-grade debt of NBFCs, housing financiers and microfinance firms.
The securities will be fully guaranteed by the government of India.
Government announces Rs 45,000 crore liquidity infusion through a Partial Credit Guarantee Scheme 2.0 for NBFCs. #AatmaNirbharBharatAbhiyan pic.twitter.com/ORLOV3bIAi
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
To give a fillip to DISCOMs with plummeting revenue and facing an unprecedented cash flow problem, Government announces Rs. 90,000 Crore Liquidity Injection for DISCOMs. #AatmaNirbharBharatAbhiyan pic.twitter.com/EVqz8nsm4p
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
In a major relief to contractors, all Central agencies 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. #AatmaNirbharBharatAbhiyan pic.twitter.com/bR2CShuddl
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
.@MoHUA_India will 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 25th March, 2020 without individual applications pic.twitter.com/SBChFjXVGv
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
The government has reduced the rates of tax deduction at source for non-salaried payments made to residents and tax collection at source for specified reciepts will be reduced by 25 percent of the existing rate.
Sitharaman said that if the tax was Rs 100 earlier then it would now be Rs 75.
This reduction will come into effect from May 14 and will last till March 31, 2021.
The payment of contract, professional fees, interest, rent, dividend, commission and brokerage shall all be eligible for the reduced rate.
The due date of all income tax returns for FY20 will be extended to Nov. 30, 2020 from July 31 and Oct. 31 earlier. Due date for tax audit will be extended to Oct. 31 from Sept. 30 earlier.
Date of assesments getting barred on Sept. 30, 2020 has now been extended to Dec. 31, 2020. Those getting barred on March 31, 2021 will be extended to Sept. 30, 2021.
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