Boost For Small Businesses, Salaries In COVID-19 Package: 10 Points

Nirmala Sitharaman said the government aims to help 45 lakh businesses by October by providing credit guarantees to help them access collateral-free loans from banks.

Boost For Small Businesses, Salaries In COVID-19 Package: 10 Points

Nirmala Sitharaman said she would announce more measures later.

New Delhi: Private sector employees will get a boost to their take-home salaries and small and medium-sized will be offered Rs 3 lakh crore in collateral-free bank loans, Finance Minister Nirmala Sitharaman announced on Wednesday, detailing parts of the government's Rs 20 lakh crore COVID-19 economic relief plan. Shadow banks and power companies will also benefit from the measures announced to combat the economic damage caused by the novel coronavirus pandemic. The government also changed the definition of MSMEs, recognising a larger number of businesses under the segment that can avail the benefits.

Here are the top 10 points on the Finance Minister's announcements:

  1. "We have a responsibility toward the poor, the needy, the migrants and the disabled," Ms Sitharaman said, in the first of several daily press conferences on the overall package, said to 10 per cent of India's GDP and focus on "Atma Nirbhar Bharat" or "self-reliant India".

  2. Ms Sitharaman told reporters the government aims to help 45 lakh businesses by October by providing credit guarantees to help them access collateral-free loans from banks. The government will also set up two debt and equity funds amounting to Rs 70,000 crore to support stressed businesses.

  3. She also said the government will provide Rs 90,000 crore for power distribution companies via state-run power finance companies.

  4. She unveiled a Rs 30,000 crore special liquidity scheme for non-banking financial institutions (NBFCs) and a Rs 45,000 crore partial credit guarantee scheme for NBFCs, housing finance companies (HFCs), and microfinance institutions (MFIs) with low credit rating.

  5. The Finance Minister lowered taxes such as TCS (tax collected at source) and TDS (taxes deducted at source) for non-salaried service providers by 25 per cent effective May 14, 2020 through March 31, 2021, that could increase liquidity by Rs 50,000 crore.

  6. For the next three months, private sector employers will get a 2 per cent relief on their contribution to the Employee Provident Fund (EPF) - a move likely to lead to a raise in take-home salaries for the employees. State-run firms will continue to pay 12 per cent as employer contribution.

  7. The Finance Minister said the due date of all income-tax return for the last financial year would be extended to November 30, 2020 from July 31, 2020 and October 31, 2020. The tax audit deadline has also been extended to October 31, 2020 from September 30, 2020.

  8. Real estate companies will be able to claim relief from regulatory penalties for up to six months when completion of projects is delayed because of the coronavirus, Ms Sitharaman said.

  9. She said the package would be partly funded through additional government borrowing already announced but declined to disclose the impact on India's fiscal deficit, which many private economists say could widen to over 5 per cent of GDP due to a fall in revenue and additional spending.

  10. Industry leaders were broadly supportive of the moves but the opposition and some economists said the measures fell short of expectations as no relief was announced for lakhs of migrant workers who have lost jobs after the national lockdown.