The situation of pandemic COVID 19 is very critical for each citizen and the economy of every country. The country has been going through lots of jiggles and Union Finance Minister on 13th May 2020 announced major reliefs and the measures for the protection of the interest of the individual and the economy under revolutionary Atmanirbhar Bharat Abhiyaan of the Government.
In this write-up, we will be discussing the briefly the major announcements & relief measures & initiatives for individuals as well as for businesses focusing on 4 ‘L’s which shall help to strengthen the 5 pillars i.e., Economy, Infrastructure, System, Vibrant Demography & Demand:
- Liquidity &
Recalling Successful Packages & Relief Measures
- Micro Finance Scheme
- PM AwasYojna
- PM Fasal BimaYojna
- Krishi Sichai Yojna amongst others.
During the pandemic, following Measures have been taken under different categories:
Sustenance of Livelihood
- Pradhan Mantri Garib Kalyan Yojna – For poor class people measures includes
- Free of Cost – Gas Cylinders.
- Increase in Wages 202 under MNREGA Scheme.
- Ex – Gratia payment to poor citizens, poor widows, and poor Divyang of totaling amount of Rs. 3000 crores.
- The farmers are paid front-loaded Rs. 2000/- to PM Kisan beneficiaries.
- Provision of usage of Building& construction Works Welfare Fund for providing relief to workers.
- The EPF contribution for PF holders of 24% consolidated to be funded by Government for the next 3 months for workers earning Rs. 15000/- p.m. and in case of Statutory PF deposit limit reduced from 12 % to 10 % for the next 3 months (except CG and PSU’S employees)
- Provision of Withdrawal of 75% of the EPF Balance simply by making applications benefitting 5 crores workers.
- Support to Self Help Groups (SHG) by extending the limit of borrowing to Rs, 20 lakhs benefitting 6.85 lakh households.
- Similar provision for District Mineral Fund (DMF) utilization for the beneficiaries.
- Allocation of Rs. 18000 crores under Emergency Health Response Package.
Assistance & Release by Various Authorities
- Enhancement of Ways & Advance Limits by RBI to 60%
- Extension of duration of payment of overdraft.
- Issued all pending Income Tax Refunds claims of up to Rs.5 lakh on an immediate basis.
- Similar move under Customs “Special Refund & Drawback Disposal Drive” for a refund of claims on an immediate basis.
Ease in Regulatory Compliance
- Extending the filing of GST returns to the end of June 2020
- 24*7 custom clearance till 30th June 2020
- Relaxation for 3 months for debit cardholders to withdraw cash free from any ATMs, etc.
- Allowing payment before 15th May 2020 for Motor Vehicle and Health Insurance Policies
- Mandatory Board meetings extended by 60 days till 30 September • Allowing Extraordinary General Meetings through Video Conference with e-voting/simplified voting facility.
- Reduction in TDS/ TCS Rates by 25%, which is a major move that shall be in effect from 14th May 2020 till the 31st March 2021. Applicable for:
- Payment for the contract,
- Payment of Professional fees,
- Interest payment,
- Rent payment,
- Receiving dividend,
- The Due date of all income-tax return for FY 2019-20 will be extended from 31st July 2020 & 31st October 2020 to 30th November 2020.
- The Due date for Tax audit from 30th September 2020 to 31st October 2020.
- Extension of period of Vivad se Vishwas Scheme for making payment without additional amount extended to 31st December 2020.
- Date of assessments getting barred on 30th September 2020 extended to 31st December 2020 and those getting barred on 31st March 2021 will be extended to 30th September 2021.
- Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December 2020.
Financial Measures by Reserve Bank of India
- Reduction of Cash Reserve Ratio (CRR) for liquidity enhancement for Rs.1,37,000 crores.
- Targeted Long Term Repo Operations (TLTROs) of Rs.1,00,050 crore for fresh deployment in investment-grade corporate bonds, commercial paper, and non-convertible debentures.
- TLTRO of Rs.50,000 crore for investing them in investment-grade bonds, commercial paper, and non-convertible debentures of NBFCs, and MFIs.
- Increased the banks’ limit for borrowing overnight under the marginal standing facility (MSF), allowing the banking system to avail an additional Rs.1,37,000 crore of liquidity at the reduced MSF rate.
- For Special Refinance Facilities to NABARD, SIDBI and the NHB for a total amount of Rs.50,000 crore at the policy repo rate.
- Opening of a Special Liquidity Facility (SLF) of Rs.50,000 crore for mutual funds to alleviate intensified liquidity pressures.
- For liquidly infusion through a partial guarantee scheme which includes commercial papers & borrowings Rs-45000 crore has been proposed under which the first 20 % of loss will be borne by the GoI.
- The moratorium of three months on payment of installments and payment of Interest on Working Capital Facilities in respect of all Term Loans.
- Easing of Working Capital Financing by reducing margins.
- For loans by NBFCs to the commercial real estate sector, additional time of one year has been given for the commencement of commercial operations (DCCO).
Measures for All Businesses & Revision of Thresholds
- Allocation of amount of Rs 3 lakh crores under Collateral free Automatic Loans for Business including MSME
- Allocation of Rs.2500 crores for EPF support for Businesses and Workers for 3 more months
- The EPF contribution reduced for Business & Workers for 3 months.
Special Additional Measures for MSMEs & other Sectors
- For Subordinate Debt for MSMEs. :
- Borrowers with outstanding amount up to Rs. 25 crore and Rs. 100 crore turnover is eligible.
- Loans to have 4-year tenure with a moratorium of 12 months on Principal repayment.
- Interest to be capped.
- 100% credit guarantee cover to Banks and NBFCs on principal and interest.
- The scheme can be availed till 31st Oct 2020 • No guarantee fee, no fresh collateral
- Government is ensuring For promoting MSME and provide them e-market facilities along with clearance of all dues of MSMEs within 45 days
- For the chance of supply for the big projects and to boost the self-reliant India MSMEs is to disallow global tenders in government procurement up to Rs-200 crore or less.
- Allocation of the amount of Rs 50,000 crore of equity infusion through MSME Fund of Funds. Promoters of the MSME will be given debt by banks, which will then be infused by the promoter as equity in the Unit.
- A revised definition of MSMEs:
|Manufacturing & Services||Investment of up to Rs. 1 cr. |
and Turnover of up to Rs.5 cr.
|Investment of up to Rs. 10 cr. and Turnover of up to Rs.50 cr.||Investment of up to Rs. 20 cr. and Turnover of up to Rs.100 cr|
- Other interventions for MSMEs
- e-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.
- Fintech will be used to enhance transaction-based lending using the data generated by the e-marketplace.
- Allocation of Rs 30,000 crores Liquidity Facility for NBFC/HCs/MFIs:
- Under this scheme investment will be made in both primary and secondary market transactions in investment-grade debt paper of NBFCs/HFCs/MFIs.
- Securities will be fully guaranteed by GoI
- Allocation of Rs 45,000 crore under Partial Credit Guarantee Scheme 2.0 for NBFC to ensure 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
- The first 20% of loss will be borne by the Guarantor i.e., Government of India.
- AA paper and below including unrated paper eligible for investment (esp. relevant for many MFIs)
- Allocation of the amount of Rs.90,000 crore for Liquidity Injection for DISCOMs:
- The digital payments facility by Discoms for consumers, liquidation of outstanding dues of State Governments, Plan to reduce financial and operational losses.
- The Central Public Sector Generation Companies shall give a rebate to Discoms which shall be passed on to the final consumers.
- Relief to contractors:
- Extension of up to 6 months to be provided by all Central Agencies.
- Government agencies to partially release bank guarantees, to the extent contracts are partially completed, to ease cash flows
- Extension of Registration of Real Estate Projects under RERA subject to consideration of the following:
- Treat COVID-19 as an event of ‘Force Majeure’ under RERA.
- Extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after 25th March 2020 without individual applications.
- Regulatory Authorities may extend this for another period of up to 3 months if needed.
- Issue fresh ‘Project Registration Certificates’ automatically with revised timelines.
- Extend timelines for various statuary compliances under RERA concurrently.
In view of the above announcements and other changes, it seems that the Government has left no stone unturned to assist and maintain the economy as well as providing assistance to each individual and the businesses including MSMEs.