On Tuesday at 8 pm, Prime Minister Modi, in his fifth address to India since the national lockdown, has announced a financial package of Rs 20 lakh crore to ease the coronavirus distress. The package is announced under ‘Aatma Nirbhar Bharat Abhiyan’ to revive the Indian economy.
20 Lakh Cr equivalent to 10% of India’s GDP
He stated in his speech ‘ To achieve self-reliance, the economic package focuses on land, labour, liquidity and laws. The economic package will help cottage industries, home industry, small-scale industries, MSMEs, which are the means of livelihood for crores of people. This package is also for farmers, who are the most important foundation who work in different weather conditions and for the middle class who pay their taxes on time.’
This 20 lakh crore is cumulative of what government has already spent to provide relief to india for example, earlier disbursement of Rs 2000 to every farmer in every three month, over and above 5kg of rice/wheat that is already given, another 5 kg per person will be given free through Public Distribution System. Besides this, one kg of preferred and region-specific choice of the pulse will also be given. Around 80 crore people will benefit under this announcement, Insurance Cover of INR 50 Lakhs or sanitation workers, ASHA workers, doctors, nurses, paramedics in case they need it as they are on the frontlines of the corona battle.
Definition Of MSME has been revised :
The new definition of MSMEs does not differentiate between a manufacturing enterprise and a service sector enterprise.
Key Highlights For MSME
Rs 3 lakh crore collateral-free loans
Banks and NBFCs will offer up to 20 per cent of entire outstanding credit as on February 29, 2020, to MSMEs. Units with upto Rs 25 crore outstanding credit and Rs 100 crore turnover are eligible for taking these loans that will have four-year tenor with a moratorium of 12 months on principal payment. The scheme can be availed till October 31, 2020. The government will provide complete credit guarantee cover to lenders on principal and interest amount.
Rs 20,000 crore subordinate debt
MSMEs which was declared NPAs or those stressed will be eligible for equity support as the government will facilitate the provision of Rs 20,000 crore as subordinate debt. The government will also provide Rs 4,000 crore to CGTMSE that will offer partial credit guarantee support to banks for lending to MSMEs.
Rs 50,000 crore equity infusion
The government will infuse Rs 50,000 in equity in MSMEs through a Fund of Funds that will be operated through a Mother fund and a few daughter fund. The Fund of Funds will be set-up with a corpus of Rs 10,000 crore to give equity-based funding to MSMEs having growth potential and viability. It will also urge MSMEs to list on stock exchanges. It Will help to expand MSME size as well as capacity
MSMEs is currently facing problems of marketing and liquidity due to COVID. To mitigate this problem Govt has launched e-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions
MSME receivables from Govt and CPSEs to be released in 45 days
This will be a step towards Self-Reliant India (आत्मनिर्भर र्ारत) and support Make in India.
PM modi emphasized more on one Statement : Once Global product was also Local product , so Buy more Indian local product & help it To become Global product.
The Changes brought in EPF provisions to help Employee & companies so that Employee can take away more cash while employer will have more liquidity . However, Central and State Public Sector Undertakings employer will continue to contribute based on the existing norm.
• The government will continue to provide 24 per cent of amount comprising basic plus dearness allowance for employees and employers for a unit employing up to 100 persons and 90 per cent of those employees earning less than ₹ 15,000 a monthFor the month of June , July & August . Earlier, this proposal was for the month of March, April and May.
• Statutory PF contribution of both employer and employee will be reduced to 10 per cent each from existing 12 per cent each for all establishments covered by EPFO for next three months
This will provide liquidity relief of ₹ 2,500 cr to 3.67 lakh establishments and for 72.22 lakh employees. The second proposal will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees
Rs. 90,000 Cr. Liquidity Injection for DISCOMs
PFC/REC to infuse liquidity of Rs 90,000 cr to DISCOMs against receivables
Loans to be given against State guarantees for exclusive purpose of discharging liabilities of Discoms to Gencos.
Central Public Sector Generation Companies shall give rebate to Discoms which shall be passed on to the final consumers (industries)
Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs
NBFCs, HFCs and MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals
• Existing PCGS scheme to be extended to cover borrowings such as primary issuance of Bonds/ CPs (liability side of balance sheets) of such entities
• First 20% of loss will be borne by the Guarantor ie., Government of India.
Rs 30,000 crore Special Liquidity Scheme for NBFCs/HFCs/MFIs
NBFCs/HFCs/MFIs are finding it difficult to raise money in debt markets.
• Government will launch a Rs 30,000 crore Special Liquidity Scheme
• Under this scheme investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFI
•Securities will be fully guaranteed by GoI
• This will provide liquidity support for NBFCs/HFC/MFIs and mutual funds and create confidence in the market.
Click on below link To know about RBI measures included in this Aatmnirbhar Bharat