- Nirmala Sitharaman said economic package for self-reliant India
- The package to focus on growth of local brands, she said.
- PM had announced Rs 20 lakh crore to support coronavirus-hit economy
Finance Minister Nirmala Sitharaman addressed a press conference to share details of the Rs 20 lakh crore package announced by Prime Minister Narendra Modi on Tuesday to tackle the impact of coronavirus on the economy as the country has been under a lockdown since March 25. This is the first of a series of press briefings by the Finance Minister in the coming days. "Beginning today, for the next few days, I will be coming here and present to you in detail, the package the PM announced yesterday. Our explanation will span over the next few days," Nirmala Sitharaman said.
Quoting Prime Minister Narendra Modi from his Tuesday's televised address to the nation, Nirmala Sitharaman said, "You heard the PM say that this is going to be rested on 5 important pillars - the economy, infrastructure, tech-driven systems, demography and demand. Focus will be on what can be defined as factors of production in today's language. Land, labour, capital and enterprise."
Here are the top announcements by Nirmala Sitharaman:
- MSME definition changed; slabs raised to ensure more businesses get benefits. Differentiation between manufacturing or service-based MSME being removed. They shall be defined similarly. So now your investment can be up to 1 crore, turnover up to 5 crore, you shall be called micro enterprise.
- Major steps for MSMEs:
1) Collateral-free automatic loan. Facility up to 3 lakh crore. These loans will have a 4 year tenure, 12-month moratorium to be given. These will be available till October 31, no guarantee fees. This will benefit 45 lakh units, so that they can resume activity and also safeguard jobs.
2) For standard MSMEs who couldn't move forward because of lockdown, you had that emergency credit line. Subordinate debt for stressed MSMEs. They have a problem of equity. Want to provide 20,000Cr liquidity. For this scheme, NPAs or stressed MSMEs, all will be eligible.
3) There is a fund being created for infusing about 50,000 crore equity into MSMEs. For those MSMEs who have potential and are viable.
4) MSMEs who may be doing viable situation but need hand-holding. This will also encourage them to get listed in the markets, which they can choose. Provisions for all 3 kinds, standard MSMEs, stressed MSMEs and viable MSMEs.
5) For government procurement, tenders up to 200cr will no longer will be on global tender route. Global tenders will be disallowed in govt procurement for tenders upto 200 crore. Majority of MSMEs were unable to supply big large firms who they were serving all the while. Suddenly the conditions became unmatchable and many couldn't participate in supply. This will make MSMEs do their business with a lot more confidence and carry on with it.
6) Post-Covid-19 exhibitions would be difficult. Would ensure e-market linkage across the board so that they can find their market easily.
- Tax Proposals: TDS and TCS - From tomorrow, till 31st March next year, there will be a 25% rate reduction across all criteria. This will help people keep up to Rs 50,000 crore in their hands rather than come to the government. We have already returned all refunds up to 5 lakhs have been given. Now pending refunds of charitable trusts, and other institutions will also be disbursed.
- Tax filing date extended to November 30. Tax Audit date extended from September 30 to October 31. "Date of filing returns extended. We will only get a clear picture by June 30. Only then will we know about who all have filed returns, about the cash. In April, till now, 11,000 crore have been given GST refunds in a month, about 27000 have got IGST refunds, remaining have got GST refunds," Revenue Secretary on April GST figures.
- Liquidity relief being given for all EPF establishments. In this, 12% which is paid by employer and 12 by employee contribution, we extend the support for another 3 months. Payments were made into eligible accounts by government for March, April and May. Some 3.6 lakh establishments benefited. What was given earlier for March, April and May, is being extended to another 3 months, would be infusing 2,500 crore liquidity and 7.22 lakh employees will benefit.
- In order to provide more take home salaries, for those which haven't been covered earlier, that is 100 employees with 90% drawing less than 15,000, second now is statutory PF contribution being reduced to 10%. This reduction is not for government. But government employees in these PSUs will be given advantage of 10%. Liquidity relief of over 6000 crore for next 3 months.
- It was felt that NBFCs were not able to get enough resources, particularly some had difficulties. 30,000CR special liquidity scheme. Investment in both primary and secondary transactions. This is taking and buying debt papers, they can be investment quality debt papers also. Expect impact on struggling NBFCs who need money to carry on with business. Partial credit guarantee scheme for NBFCs. 20%, first 20% to be borne by guarantor, that is government. Double AA rated papers and also below that, all will be included. Even unrated papers will be eligible for investments.
- DISCOMs facing unprecedented cash flow problems. They need help. You need all the states, DISCOMs in serious crisis. Emergency liquidity injection to the extent of 90,000 crore. To all DISCOMs, against all receivable they have. Now making a one-time provision to infuse that money into DISCOMs and who in turn, this will be done with the state issuing guarantees. The customer, we want benefit to be passed on to customers, rebate for central firms who pass benefits to the final customers.
- All government agencies, such as Railways, Highways, CPW etc, will now get a 6 month extension, they can take additional 6 months to comply with contract conditions. In order to facilitate greater liquidity, government agencies will partially release bank guarantees, to the extent of partially completed contracts.
- Real estate: Urban development ministry shall issue advisory to states and UTs so that regulatory authorities are given clear picture, they can treat it as an act of god and therefore be flexible about the contract signed. They'd have to issue fresh project registration, can extend completion date by 6 months for all registered projects. These measures will de-stress developers and real estate industry.