Finance Minister Nirmala Sitharaman big announcements today, elaborating on Prime Minister Narendra Modi’s address to the nation yesterday where he had said she would, today onwards, unveil the details of the Rs 20 lakh crore package to boost the economy that is undergoing a slowdown due to the nationwide as well as global lockdown.
The finance minister said that the Rs 20 lakh crore package announced by the prime minister on 12 May had been prepared after talks with all the stakeholders. Sitharaman said that the government was taking care of the industry with this package. She said that this package was necessary to accelerate growth.
Sitharaman started the press conference at 4 PM with the ‘Atmanirbhar Bharat’ (Self-Reliant India) campaign. She said that Prime Minister Modi had presented the vision of a self-reliant India before the country the previous day. She expressed confidence that this package would make India self-reliant. She said making the local brand global was part of the Self-Reliant India mission.
Sitharaman increases Indian consumer’s purchasing power
The finance minister announced a reduction by 25% in the rate of the tax deducted at source (TDS) and the tax collected at the source (TCS) by 31 March 2020.
This move of the government will spare more money to spend in the hands of the people and thus increase the consumer’s purchasing power. At a time when the Modi-led government’s constant encouragement to the industry and investors for the past six years has hardly borne fruits, it is hoped that addressing the woes of the consumers for a change works in reviving the economy.
Sitharaman announced an extension in the deadline for filing income tax returns too. The due date of income tax returns for the year 2019-2020 has now been extended from 31 July and 31 October to 30 November 2020.
Sitharaman said that in June, July and August too, the government will submit EPF (ie 24% of salary) for people getting salaries less than Rs 15,000 a month. This announcement applies only to companies that have less than 100 employees.
However, 90% of the Indian employees’ salaries being less than Rs 15,000, it covers almost the entire lower middle class that is salaried: 72 lakh.
MSME can build on state money
Earlier, she had said that the government would give a loan of Rs 3 lakh crore to micro, small and medium industries (MSME) sector without any guarantee.
The finance minister said that this was a collateral-free loan guarantee scheme as she announced six steps for MSMEs.
As many as 45 million MSMEs are expected to benefit from the collateral-free loan scheme where the loan will be for a duration of 4 years.
The scheme of loans worth up to Rs 25 crore — the total package is worth Rs 3 lakh crore worth of loans without guarantee for the entire MSME sector — will benefit companies with a turnover of Rs 100 crore. There will be a moratorium of 12 months in the 4-year loan scheme.
Sitharaman additionally announced the creation of a Rs 50,000 crore fund for the MSMEs while saying that the “definition of MSMEs will change” as they would be linked to the e-market. The government is thus laying emphasis on e-market linkage for MSMEs.
“Post-COVID (lockdown), since trade fairs and exhibitions will be difficult, we will provide e-market facilities,” Sitharaman said, adding that the government and Central Public Sector Enterprises (CPSEs), where there are receivables, all will be cleared within 45 days.
Relief in provident funds
Earlier, Sitharaman had said that the relief given to some companies in the employees’ provident fund (EPF) would continue for the next three more months. The minister said that the government was allowing private companies to contribute 10% instead of 12% in the PF fund for the next three months.
The government will arrange for an investment of Rs 2,500 crore in the EPF whereas companies will get relief in this regard in June, July and August.
As many as 72 lakh employees benefit from government support in the EPF. The contribution of a private company in the EPF has been reduced from 12% to 10%, thus reducing their liability.
At the same time, Sitharaman said, employees will together gain Rs 6,800 crore from the new government policy.
MSME includes NBFC sector, discoms, real estate
The finance minister announced also a package of Rs 20 crore out of the Rs 3 lakh crore for MSMEs for the non-banking financial companies (NBFC).
The government will launch a Rs 30,000 crore Special Liquidity Scheme. This will enable investment in both primary and secondary market transactions in investment grade debt paper of NBFCs, HFCs and MFIs.
Sitharaman said the power distribution companies (discom), also in the MSME sector, would be infused with Rs 90,000 crore cash. “Discoms face a huge cash flow problem,” the finance minister noted.
The minister classified companies with turnovers of Rs 10 crore to Rs 50 crore as “small”.
She said only Indian companies would be allowed to participate in the government tenders for companies with turnovers below Rs 200 crore, which will not be open for global tenders.
Announcing great relief for the contractors, the finance minister said that all the central agencies would give the contractors an additional six months to complete the work at no charge.
Announcing a relief to real estate developers too, the government has extended the deadline for completion of the project and registration by six months.
Poor being served simultaneously
Earlier, Sitharaman had said that 5.5 kg of rice or other foodgrain had been distributed to 80 crore poor people.
She said 8 crore people had received free LPG cylinders for three months under the Ujjwala scheme. The announcements made under the Garib Kalyan Yojana are being met.
Sitharaman repeated the prime minister’s classifications of five pillars of self-reliant India: economy, infrastructure, systems, demography and demand.
Prime Minister Modi had on 12 May announced the package of Rs 20 lakh crore during his address to the nation. The prime minister had said that this package was being brought with a resolve to making the country self-reliant in this era of coronavirus crisis. He had said that these packages were for the country’s workers, farmers, middle class, cottage industries and MSME sector.