Nirmala Sitharaman speech live updates 20 lakh crore Economic Package

by CA Nimesh Hariya | May 13, 2020 | General Update

The Rs 20 lakh crore package is almst 10 percent of India’s GDP and comes as the country battles economic slowdown and effects of the global novel coronavirus pandemic. Known COVID-19 infections in India have reached 74,281​ and deaths are at 2,415.

Addressing the nation on May 12, PM Modi had said the Rs 20 lakh crore package would allow various sections of the country and those linked to economic system to get support and strength. “This package will give a new impetus to the development journey of the country in 2020 and a new direction to the self-reliant India campaign. In order to prove the resolve of a self-reliant India, land, labour, liquidity and laws all have been emphasised in this package,” he added.

Industrialist Sajjan Jindal welcomed the Rs 20 lakh crore stimulus package announced by Prime Minister Narendra Modi to revive the economy hit by COVID-19, saying it will give a boost to the ambitious Make in India programme. 
“The package is predicated to make the Indian economy self-reliant by leveraging our inherent strengths of demographics, technological skills and domestic demand by building infrastructure and robust supply chains that would give a boost the Make in India programme,” Jindal said in a statement. The Prime Minister’s emphasis on being ‘Vocal about Local’ and to buy local is a message to rekindle India’s sagging manufacturing sector, he said. 
“This announcement is a bold move by the government, no doubt, but we will have to read the fine print through subsequent announcements by the FM to see how this would be implemented and what specific benefits the nation will derive from it,” Jindal said
– PTI

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 Athma Nirbhar Bharat Abhiyan: Sitharaman

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: Sitharaman

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: Anurag Singh Thakur

Today’s tranche has 14 different measures. Of these, 6 are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 for discoms, 1 for contractors, 1 for real estate sector, and 3 tax measures: Sitharaman

For standard MSMEs, collateral free automatic loans worth Rs 3 lakh crore will be provided. This is for 4 year tenure and is 100 percent guaranteed. No principal repayment for 12 months. This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs: Sitharaman

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: Sitharaman

Funds of fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable. Corpus of Rs 10,000 crore – through mother fund and daughter fund we will provide support. This will help expand capacities and help them get listed in markets of choosing: Sitharaman

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: Sitharaman

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: Sitharaman

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: Sitharaman

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: Sitharaman

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: Sitharaman

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: Sitharaman

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: Sitharaman

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: Sitharaman​

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: Sitharaman

 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: Sitharaman

Reduced TDS and TCS rates by 25 percent. This is applicable on all payments – interest, rent, brokerage, supply, etc. This will be enforced from tomorrow till March 31, 2021. This reduction will release Rs 50,000 crore in hands of people: Sitharaman

All pending refunds of charitable trust, non-profit business, cooperatives and small partnerships, shall be issued immediately. Due date of all I-T returns for FY19-20 from July 31, 2020 and October 31, 2020 extended till November 31, 2020. Tax audits extended from September 30, 2020 till October 31, 2020. Date of assessments getting barred as of September 2020 is extended till December 2020. Those getting barred on March 31, 2021 are being extended till September 31,  2021. Vivad se Vishwas scheme is being extended till December 31, 2020 without any additional amount: Sitharaman