Finance Minister Nirmala Sitharaman's announcement on stimulus package on May 13, 2020
*Finance Minister Nirmala Sitharaman:*
• Prime Minister has laid out a vision after several discussions at various levels. Inputs obtained were given due consideration. This is to spur growth and built a self-reliant India. This initiative is called Atma Nirbhar Bharat Abhiyan.
• Not to look inwards and isolationist, but a India that can be confident and contribute to the growth. We have the enterprise to build such capabilities and help the world.
• To build the 'Atma Nirbhar India', India has DBT, Ujjawala Yojana, AWAS Yojana, Swaccha Bharat Abhiyan and Ayushman Bharat. Several schemes which benefitted poor were reform driven.
• PM has always been on the side of reform for better ease of living in the country.
• The vision and thought of Atma Nirbhar Bharat has brought India together in these tough times. India has emerged better than others in these times. We are also helping other countries by supplying with drugs.
• PM spoke of 5 pillars of the economy. Our system has to move so that India can emerge as a power in the 21st century. Looking at what should be done to bring us up to par, bring in bold reforms. PM is known for big decisions.
• Bold reforms have been done for six years. Is being done now and will continue till India is Atma Nirbhar.
• Government has responded countless times to calls. You are speaking to a responsive, sensitive government. Within hours of the lockdown announced by the PM, the Garib Kalyan Yojana was announced.
• Beginning today, we shall come with this entire team before you to put out details of PM's vision. We willl come with tranches beginning today. We have responsibility towards poor, needy, migrant and divyang (differently-abled).
• Today's tranche has 14 different measures. Six of these are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 to discoms, 1 to contractors, 1 real estate, 3 tax measures.
• For MSMEs, collateral free automatic loans worth Rs 3 lakh crore will be provided.
This is for 4 year tenure and is 100 percent guaranteed. This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs.
• Rs 20,000 crore will be infused through subordinate debt for stressed MSMEs who have equity problems. This liquidity line will benefit 2 lakh MSMEs. All NPA' or stressed MSMEs are eligible for scheme. Government will provide Rs 4,000 crore to CGTMSE who will provide partial guarantee to banks who will then give benefit to stressed MSMEs.
• Funds of fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable.
• Definition being changed for MSMEs in their benefit. So that they can grow in size and get benefits. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorised similarly.
• Next step for MSMEs, global tenders in government procurement will be disallowed for up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these big projects. Small units can be part of government purchases and now Self-reliant India can Make in India.
• Sixth step for MSMEs is that post COVID, since trade fairs and exhibitions will be difficult, we will provide e-market facilities. GoI and CPMEs where there are receivables - all will be cleared within 45 days.
*For EPF*
• EPF relief for all establishments with Rs 2,500 crore liquidity support. GoI will provide both employer and employee - 12% contributions. Extending support for another three months from March-May 2020 to June-August 2020 as well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will benefit.
• To increase take-home salaries for those not covered in EPF benefit, the statutory PF contribution is being reduced from 12 percent to 10 percent. For state PSUs - the employers will continue to pay 12 percent, employees will get option to pay 10 percent for the next three months.
*For NBFCs*:
• For NBFCs, HFCs and MFIs - it was felt NBFCs were not getting resources. We are launching Rs 30,000 crore special liquidity scheme where government will buy investment grade debt papers of NBFCs, HFCs and MFIs - not high quality only. These securities will be fully guaranteed by GoI. We hope that these NBFCs - which do not have high quality debt papers, can then support the MSMEs dependent on them.
• For NBFCs, HFCs and MFIs - Rs 45,000 liquidity infusion through partial guarantee scheme. Will cover commercial papers and borrowings. First 20 percent loss will be borne by guarantor - GOI. Double AA rated paper and unrated papers will all be eligible.
*For Discoms*
• For discoms facing unprecedented cash flow problems, unable to pay gencos. To help them a one-time emergency liquidity infusion of Rs 90,000 crore via PFC and REC is provided. This will be a state issued guarantee and rebate will be provided to those discoms that pass benefit to end-customer.
*For Contractors*
• For contractors. All GoI agencies, such as Railways, highways or central public works, will give three to six months extension to all contractors without extra costs. This will cover construction work and goods and services contracts, completion of works and intermediate milestones, and also concessional period in PPP contracts. To facilitate greater liquidity, government agencies will partially release bank guarantees to the extent of the completed contract so that cash flow improves.
• *Real Estate*
For real estate sector - the Urban Development Ministry shall issue advisories to states and UTs to treat the COVID-19 period as an 'Act of God' and thus allow force majeure. Thus, 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 March 25, 2020
• *Taxation*
Relief for Tax Payers-
TDS/TCS rates reduced by 25% in existing tax rates.
- Pending refunds should be given immediately.
- Due date of all IT Returns extended to 30 th November, 2020. Tax Audit by Oct 30, 2020.
- Date of Assessment getting barred extended till 31st December 2020 and those getting barred on 31March 2021, extended upto September 30, 2021.
- Vivad se Vishwas scheme extended upto December 31st 2020 without any penalties.
• Prime Minister has laid out a vision after several discussions at various levels. Inputs obtained were given due consideration. This is to spur growth and built a self-reliant India. This initiative is called Atma Nirbhar Bharat Abhiyan.
• Not to look inwards and isolationist, but a India that can be confident and contribute to the growth. We have the enterprise to build such capabilities and help the world.
• To build the 'Atma Nirbhar India', India has DBT, Ujjawala Yojana, AWAS Yojana, Swaccha Bharat Abhiyan and Ayushman Bharat. Several schemes which benefitted poor were reform driven.
• PM has always been on the side of reform for better ease of living in the country.
• The vision and thought of Atma Nirbhar Bharat has brought India together in these tough times. India has emerged better than others in these times. We are also helping other countries by supplying with drugs.
• PM spoke of 5 pillars of the economy. Our system has to move so that India can emerge as a power in the 21st century. Looking at what should be done to bring us up to par, bring in bold reforms. PM is known for big decisions.
• Bold reforms have been done for six years. Is being done now and will continue till India is Atma Nirbhar.
• Government has responded countless times to calls. You are speaking to a responsive, sensitive government. Within hours of the lockdown announced by the PM, the Garib Kalyan Yojana was announced.
• Beginning today, we shall come with this entire team before you to put out details of PM's vision. We willl come with tranches beginning today. We have responsibility towards poor, needy, migrant and divyang (differently-abled).
• Today's tranche has 14 different measures. Six of these are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 to discoms, 1 to contractors, 1 real estate, 3 tax measures.
• For MSMEs, collateral free automatic loans worth Rs 3 lakh crore will be provided.
This is for 4 year tenure and is 100 percent guaranteed. This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs.
• Rs 20,000 crore will be infused through subordinate debt for stressed MSMEs who have equity problems. This liquidity line will benefit 2 lakh MSMEs. All NPA' or stressed MSMEs are eligible for scheme. Government will provide Rs 4,000 crore to CGTMSE who will provide partial guarantee to banks who will then give benefit to stressed MSMEs.
• Funds of fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable.
• Definition being changed for MSMEs in their benefit. So that they can grow in size and get benefits. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorised similarly.
• Next step for MSMEs, global tenders in government procurement will be disallowed for up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these big projects. Small units can be part of government purchases and now Self-reliant India can Make in India.
• Sixth step for MSMEs is that post COVID, since trade fairs and exhibitions will be difficult, we will provide e-market facilities. GoI and CPMEs where there are receivables - all will be cleared within 45 days.
*For EPF*
• EPF relief for all establishments with Rs 2,500 crore liquidity support. GoI will provide both employer and employee - 12% contributions. Extending support for another three months from March-May 2020 to June-August 2020 as well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will benefit.
• To increase take-home salaries for those not covered in EPF benefit, the statutory PF contribution is being reduced from 12 percent to 10 percent. For state PSUs - the employers will continue to pay 12 percent, employees will get option to pay 10 percent for the next three months.
*For NBFCs*:
• For NBFCs, HFCs and MFIs - it was felt NBFCs were not getting resources. We are launching Rs 30,000 crore special liquidity scheme where government will buy investment grade debt papers of NBFCs, HFCs and MFIs - not high quality only. These securities will be fully guaranteed by GoI. We hope that these NBFCs - which do not have high quality debt papers, can then support the MSMEs dependent on them.
• For NBFCs, HFCs and MFIs - Rs 45,000 liquidity infusion through partial guarantee scheme. Will cover commercial papers and borrowings. First 20 percent loss will be borne by guarantor - GOI. Double AA rated paper and unrated papers will all be eligible.
*For Discoms*
• For discoms facing unprecedented cash flow problems, unable to pay gencos. To help them a one-time emergency liquidity infusion of Rs 90,000 crore via PFC and REC is provided. This will be a state issued guarantee and rebate will be provided to those discoms that pass benefit to end-customer.
*For Contractors*
• For contractors. All GoI agencies, such as Railways, highways or central public works, will give three to six months extension to all contractors without extra costs. This will cover construction work and goods and services contracts, completion of works and intermediate milestones, and also concessional period in PPP contracts. To facilitate greater liquidity, government agencies will partially release bank guarantees to the extent of the completed contract so that cash flow improves.
• *Real Estate*
For real estate sector - the Urban Development Ministry shall issue advisories to states and UTs to treat the COVID-19 period as an 'Act of God' and thus allow force majeure. Thus, 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 March 25, 2020
• *Taxation*
Relief for Tax Payers-
TDS/TCS rates reduced by 25% in existing tax rates.
- Pending refunds should be given immediately.
- Due date of all IT Returns extended to 30 th November, 2020. Tax Audit by Oct 30, 2020.
- Date of Assessment getting barred extended till 31st December 2020 and those getting barred on 31March 2021, extended upto September 30, 2021.
- Vivad se Vishwas scheme extended upto December 31st 2020 without any penalties.
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