Finance Minister Nirmala Sitharaman briefed the media on Wednesday (13 May) to share details of the Rs 20 lakh crore package announced by Prime Minister Narendra Modi yesterday to tackle the impact of coronavirus.
The government will provide collateral-free automatic loan up to Rs 3 lakh crore for the Micro, Small & Medium Enterprises (MSME) with a time frame of 4 years with a 12 month moratorium period. 45 lakh MSMEs will benefit from this scheme. Eligible must have turnover of Rs 100 crore.
The government will facilitate provisions of Rs 20,000 crore as subordinate debt for stressed MSMEs.
FinMin also announced Rs 50,000 crore equity infusion for MSMEs (who may be doing viable business but need handholding because of current situation) through Fund of Funds; to be operated through a Mother Fund and few daughter funds. This will help to expand MSME size as well as capacity.
Government of India and Central Public Sector Enterprises will honour every MSME receivable in the next 45 days. Definition of MSMEs has been revised; investment limit will be revised upwards and additional criteria of turnover is also being introduced.
Indian MSMEs and other companies have often faced unfair competition from foreign companies. Therefore, global tenders will be disallowed on Government procurement tenders upto Rs 200 crore. Necessary amendments of General Financial Rules will be effected. This will be a step towards self-reliant India and support Make in India. This will also help MSMEs to increase their business.
FinMin announced a Rs 30,000 crore special liquidity scheme for non-banking financial companies, microfinance companies, housing finance companies. Under this scheme investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs. This will provide liquidity support for NBFCs/HFC/MFIs and mutual funds and create confidence in the market.
The government announces Rs 45,000 crore liquidity infusion through a partial credit guarantee scheme 2.0 for NBFCs.
Sitharaman also unveiled liquidity injection for power distribution companies. With demand reduction, DISCOMs are facing an unprecedented cash flow problem. PFC/REC will infuse liquidity of Rs 90,000 crore to DISCOMs against receivables.
In order to provide more take home salary for employees and to give relief to employers in payment of PF, Employees' Provident Fund (EPF) contribution is being reduced to 10% from 12% earlier for businesses & workers for 3 months, amounting to liquidity support of Rs 6750 crore. This scheme will be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension.
The government has also decided to continue the 24% employee provident fund (EPF) support provided to the business for 3 additional months providing a liquidity relief of Rs 2,500 crore under the PM Garib Kalyan Package (PMGKP). The business eligible for the PMGKP support employ less than 100 workers and 90% of their workers have a salary of less than Rs 15,000.
All Central agencies will be provided an extension of up to 6 months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts. Government agencies will partially release bank guarantees, to the extent contacts are partially completed to ease cash flow.
FinMin announced extension of registration and completion date of real estate projects under RERA. The Ministry of housing and urban affairs will advise States/UTs and their Regulatory Authorities will extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after 25 March 2020 without individual applications.
In order to provide more funds at the disposal of the taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates. The move will result in Rs 50,000 crore liquidity.
Among other measures, the due date of all income-tax return for financial year 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. All pending refunds to charitable trust and non-corporate business and professionals including proprietorship, LLP and co-operative shall be issued immediately.
Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31 December 2020.
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