From ITR filing deadline extension, TDS rate cut to Easier Loans for MSMEs and more, the Financial Package to Strengthen India's Economy
As mentioned by PM Modi yesterday, Finance Minister Nirmala Sitharaman today announced the Economic Relief Package detailing the government measures to various sectors. The entire relief package is subjected towards Modi’s vision ‘Atmanirbhar Bharat Abhiyan’ or Self-Reliant Indian Movement where he emphasized on five pillars – Economy, Infrastructure, System, Vibrant Demography and Demand. The entire financial package is a bold move focused on strengthening these pillars and making India a power-hub.
The package will cater to various sections including cottage industry, MSMEs, labourers, middle class, industries and others. The Pradhan Mantri Garib Kalyan Package of 1.70 lakh crore is for poor to help them fight the battle against coronavirus. It includes insurance cover of 50 lakh per health worker, benefit of 5kg wheat or rice per person for next three months for 80 crore poor people, 1kg pulses for each household for free every month for the next three months, 500 per month for the next three months to every 20 crore women Jan Dhan account holder, free gas cylinder to eight crore poor families for the next three months, increase in MNREGA wage to 202 a day to benefit 13.62 crore families and ex-gratia of 1,000 to three crore poor senior citizen, poor widows and poor divyang. It also comprises of front-loaded 2,000 paid to farmers under existing PM-KISAN to benefit 8.7 crore farmers. Building and Construction Workers Welfare Fund allowed to be used to provide relief to workers, 24 percent of monthly wages to be credited into their PF accounts for next three months for wage-earners below 15,000 pm in businesses having less than 100 workers, five crore workers registered under EPF to get non-refundable advance of 75 percent of the amount or three months of the wages, and limit of collateral free lending to be increased to 20 lakh for women self-help groups, and many more.
Government even sanctioned 15,000 crore for emergency health response package, while even provided relaxation in statutory and compliance matters such as extending last date for ITR to June 30, 2020, GST returns to end of June 2020, three months relaxation for debit cardholders to withdraw cash free from any ATMs and more. On the other hand, the RBI has targeted long term repo operations of 1,00,050 crore for fresh deployment in investment grade corporate bonds, commercial paper, and non-convertible debentures. It increased the banks’ limit for borrowing overnight under the marginal standing facility, allowing the banking system to avail an additional 1,37,000 crore of liquidity at the reduced MSF rate while announcing many other measures.
For the MSMEs, the government has brought many reforms too while changing the definition of the sector. Some measures for this sector are 3 lakh crore Collateral free Automatic Loans for business including MSME, 20,000 crore Subordinate debt, 50,000 crore equity infusion through MSME Fund of Funds, global tender to be disallowed up to 200 crore, 30,000 crore liquidity facility for NBFC/HCs/MFIs, Rs,45.000 crore partial credit guarantee scheme 2.0 for NBFC, and many more.
For the DISCOMs, the government has announced 90,000 crore liquidity injection. Further loans will be given against state guarantees for exclusive purpose of discharging liabilities of DISCOMs to Gencos, and many more. For contractors, the government has provided an extension of up to six months, while the government agencies to partially release bank guarantees to ease cash flows. It also extends registration and completion date of real estate projects under RERA. The package also includes 50,000 crore liquidity through TDS/TCS rate reduction, which shall be applicable for the remaining part of the FY 2020-21 apart from other direct tax measures.