India's Finance Minister announces economic package details
India Prime Minister Narendra Modi raised hopes of the nation by announcing a massive economic relief package worth INR20 lakh crore (about USD266 billion). The relief package was able to attract Indian investors to fulfil the government’s idea of a ‘self-reliant India’. It received appreciation from different sectors of the society including big industrialists, common businessmen, and the general masses. People keenly watched the press conference addressed by the Finance Minister on ‘Aatmanirbhar Bharat Abhiyaan or Self-Reliant India Movement’.
Finance Minister Nirmala Sithraman announced the fine print from the package that every investor was looking towards. The economic package briefing by Sithraman went on in various phases where the total amount and relief allocated to different sectors was revealed.
The Narendra Modi government is known to hold back things until the last moment and it seems to follow the same suit with the relief package by holding off measures for many days.
Few measures announced by Finance Minister Nirmala Sitharaman on 13 May 2020-
Focus on Micro, Small, and Medium Enterprises (MSMEs)
- Collateral free automatic loans worth INR3 Lakh Crore with 4-year tenure to be given to MSMEs.
- INR20,000 crore new liquidity line through subordinate debt for stressed MSMEs.
- INR50,000 crore initiated in new funding for MSMEs.
- Investment and turnover limit in MSMEs revised upwards.
- Global tenders to be disallowed for government projects worth INR200 crore or less.
- Government of India and public institutions to clear pending payment of MSMEs within next 45 days.
EPF relief for employees and employers
- Government of India to provide provident fund contributions of 12% for both eligible employees and employers for three more months.
- Statutory provident fund contribution for employers to be reduced from 12% to 10% to increase take-home salaries.
Measures announced for Non-Banking Financial Companies (NBFCs)
- INR30,000 crore special liquidity scheme to be launched where the government will buy investment-grade debt papers of NBFCs, HFCs and MFIs.
- INR45,000 liquidity infusion through a partial guarantee scheme to cover commercial papers and borrowings.
Measures for Discoms to maintain electricity production and supply
- Emergency liquidity infusion of INR90,000 crore.
Relief measures for Government of India contractors
- Government agencies such as railways, highways, or central public works, will give three to six months extension to all contractors without extra costs. They will also help the said firms in getting liquidity approval to cover new construction costs for them.
Measures for Real estate sector
- Government will release an advisory for states and UTs to treat COVID-19 as ‘Act of God’. Thus allowing force majeure. Fresh project registration certificates can be issued and registration and completion date can be extended suo moto for up to six months for projects registered on or after 25 March 2020.
Tax measures for COVID-19 relief
- Government reduced TDS and TCS rates by 25 percent. This is applicable on all payments - interest, rent, brokerage, supply, etc. It will be enforced from 14 May 2020 to 31 March 2021.
- All pending refunds of charitable trusts, non-profit business, cooperatives, and small partnerships to be issued immediately.
- Due date of all income-tax returns for FY 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.
To create more job opportunities in the country, the government has announced six relief measures for MSMEs, two for EPF, two NBFCs and MFIs, one for discoms, one for contractors, one for real estate sector, and three tax measures. The new measures will help in survival, growth, and progress of individuals and institutions. Many issues that were receiving a blind eye from the government for decades have been addressed and entrepreneurs in the country are thanking global economic depression for same.
People in India will now look out for what the finance minister announces in further sessions of the economic package reveal. While experts and businessmen are already conducting a monetary analysis, the common man is on a lookout for a measure to support his income and finance.