The government has taken decisive action to contain and mitigate the spread of the virus and to limit the adverse impacts on the citizens. Through various measures, it is helping businesses stay afloat, supporting households, and helping preserve employment. This readiness to act helps boost confidence.
Atma-nirbhar Bharat Abhiyaan has made headlines across the globe and has come as part of a major economic relief package to assuage India’s economic predicament amidst the pandemic. Combined with all previous economic stimulus efforts, the total amount of the relief package comes to a whopping Rs. 20 lakh crore.
This COVID relief package puts bold reforms at the heart of Modi's stated plan to make India self-reliant so that any other crisis that may emerge in the future could be efficiently tackled.
The credit guarantee of 3 lakh crore by the government is intended to help MSMEs that have a 25 crore outstanding loan or less than 100 crore turnover. This provision will rescue MSMEs that need additional funding to meet operational liabilities and restart operations. There is a 100% credit guarantee cover on principal and interest. The credit guarantee scheme is expected to help MSMEs survive the economic slowdown. Credit guarantees help banks meet the credit demand of MSMEs and provide an assurance that loans will be repaid by the government.
The finance minister also announced a Rs 30,000-crore liquidity scheme for NBFCs. As per the scheme the government will buy debt papers by NBCs, MFIs, and HFCs. The buying of papers will be fully guaranteed by the government of India.
The government has set aside 20,000 crores as subordinated debt to help about two lakh MSMEs with stressed accounts or non-performing assets (NPA). Under this scheme, promoters of the MSME will be given debt, which will then be infused as equity in the unit. However, unlike credit guarantees, government support in this scheme is not full but partial.
The government has created a fund with a corpus of Rs. 50,000 crore for MSMEs with growth potential and viability. The objective of this fund is to infuse equity to help MSMEs expand and grow.
While announcing the credit guarantee for MSMEs, the Finance Minister assured that the Centre would clear pending MSME dues in 45 days. As of March 31, 2020, the total outstanding payments to MSME units were estimated at over 4.95 lakh crore. The Central Government ministries and departments, state governments and public sector units owe MSMEs more than half of this amount.
Power distribution companies will get Rs 90,000 crore liquidity against receivables from state-owned Power Finance Corp. and Rural Electrification Corp. This will allow these discoms to pay dues to power producers.
The extension of the 12% government support for EPF contribution for the next three months would lead to Rs 2,500 crore liquidity infusion. The liquidity relief will be given to all EPF establishments.
The Union government has decided to reduce statutory PF contribution by employers to 10% from the existing 12% for a period of three months. It will bring a further Rs 6,750 crore relief while giving more money in the hands of employees.
Also for government procurement, tenders up to Rs 200 crore will not be regarded as global tender.
Due date of all Income Tax Return filings extended from July 31,2020 to November 30,2020
A reduction of 25% of existing rates of Tax Deducted at Source (TDS) & Tax Collection at Sources (TCS) till March 31, 2021. This will release Rs 50,000 crores