Dubai - Sitharaman said the announcements would be made in tranches.
Published: Wed 13 May 2020, 8:24 PM
Last updated: Wed 13 May 2020, 10:40 PM
India's Finance Minister Nirmala Sitharaman on Wednesday outlined the first tranche of the massive Rs20 trillion ($266 billion) fiscal stimulus announced a day ago by Prime Minister Narendra Modi.
Sitharaman said the announcements would be made in tranches. The measures, seeking to give a major push to revive the lockdown-battered economy, combines the government's recent announcements on supporting key sectors and also measures rolled out by the Reserve Bank of India since lockdown began on March 24 midnight. These earlier measures now together account to Rs7.79 trillion of the total package.
Central to the first phase of the plan is a provision of Rs3.0 trillion collateral free loans for MSMEs, having a four-year tenure and moratorium of 12 months. These loans will be available till October 31, 2020 and will be 100 per cent credit guaranteed. This will help 4.5 million units to resume activity and safeguard jobs. To provide stressed MSMEs with equity support, government will facilitate provision of Rs200 billion as subordinate debt.
In another major reform, New Delhi has changed the definition of MSMEs so that they need not worry about growing in size and still avail of the benefits. Investment limit which defined an MSME has been revised upwards to Rs 10 million compared to Rs 2.5 million earlier.
Sitharaman said with effect from May 14 till March 31, 2021, TDS/TCS (tax deducted at source/tax collected at source) has been reduced by 25 per cent of the existing rate and is applicable to all payments. It will release Rs 500 billion in the hands of the people instead of paying them as taxes. Due date of all income-tax return for FY 2019-20 will be extended from July 31, 2020 & October 31, 2020 to November 30, 2020 and Tax audit from September 30, 2020 to October 31, 2020.
The finance minister, who was flanked by the Minister of State Anurag Thakur and the finance ministry officials, said that the "Aatmanirbhar Bharat" announced by the prime minister rests on five pillars: Economy, infrastructure, technology-driven systems, demography, and demand. The focus will be on factors of production: Land, labour, liquidity and laws. The intention is to make local brands global.
The minister said global tenders will be disallowed up to Rs 2 billion for government contracts. The government and public sector units will clear all the receivables in next 45 days.
She said a liquidity relief of R25 billion EPF (employees provident fund) support is being given to all EPF establishments, EPF contribution will be paid by the government for another three months till August and will benefit more than 7.2 million employees.? Other incentives include Rs300 billion special liquidity scheme for investing in investment grade debt paper of NBFCs (non-banking financial companies), housing finance companies HFCs and micro finance institutions.
These NBFCs are those that are also funding MSMEs. There will be a Rs450 billion partial credit guarantee scheme 2.0 for NBFCs under which the first 20 per cent loss will be borne by the guarantor that is the government, she said.
The package includes a one-time emergency liquidity injection of Rs 900 billion for distribution companies, against all their receivables guaranteed by the state.
issacjohn@khaleejtimes.com
iPhone | iPad
Android
Huawei
