NEW DELHI, May 13 - The government on Wednesday announced about Rs 6 lakh crore package comprising Rs 3 lakh crore of collateral-free loans for small businesses and a Rs 30,000 crore lifeline to non-bank and housing finance companies as part of measures to help the economy tide over disruptions caused by the coronavirus lockdown.
Also, it cut the tax rate on non-salary payments by 25 per cent, extended support to companies to meet statutory liability on employees� retirement fund, provided a Rs 90,000 crore bailout to cash-starved electricity distribution companies and gave construction firms up to six more months to complete the government projects.
Announcing the first set of components of the Rs 20 lakh crore COVID-19 economic stimulus package announced by Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman said the measures will help �spur growth and build a very self-reliant India�.
�It addresses ease of doing business, compliance, and due diligence and the intention is also to build local brands,� she said.
The Rs 20 lakh crore spending, including ones previously announced and the Reserve Bank measures, is seen as a government�s attempt to check the world�s fifth-largest economy hurtling towards its first full-year contraction in four decades.
Sitharaman said automatic collateral-free loans of a 4-year tenure with a 12-month moratorium on interest payment, will benefit 45 lakh small businesses.
Another two lakh such businesses would benefit from a Rs 20,000 crore subordinate debt for stressed or loan defaulting MSMEs, she said, adding a fund of funds for MSMEs is also being created, which will infuse Rs 50,000 crore equity in units that have growth potential.
Also the definition of MSMEs has been changed from a pure investment-based one to that provides for higher investments and turnover for companies to remain as small businesses, and avail financial and other incentives.
Besides, an estimated Rs 1 lakh crore in dues to MSMEs by government and Central PSUs will be released within 45 days.
Small and mid-sized businesses in India account for about a third of gross domestic product and employ more than 11 crore people and the package announced on Wednesday is aimed at helping them overcome coronavirus disruptions.
The Finance Minister announced a Rs 30,000 crore special liquidity scheme for non-banking finance companies, housing finance companies and micro-finance institutions that are finding it difficult to raise money in debt markets.
Further a Rs 45,000 crore partial credit guarantee scheme 2.0 was also announced for NBFCs, HFCs, and MFIs with low credit rating to help them extend a loan to individuals and MSMEs.
In a relief to contractors, she announced up to six months (without costs to contractor) to be provided by all Central agencies like Railways, road transport ministry and Central public works department to finish construction works, and goods and services contracts.
For electricity distribution companies, she said state-owned Power Finance Corp (PFC) and Rural Electrification Corp (REC) will infuse Rs 90,000 crore liquidity against receivables, subject to discoms undertaking reforms such as digital payments. � PTI
Highlights
� Rs 3 lakh crore emergency working capital facility for businesses, including MSMEs
� Rs 20,000 crore subordinate debt for stressed MSMEs
� Rs 50,000 crore equity infusion through MSME Fund of Funds
� New definition for MSMEs
� No global tenders for govt procurement worth up to Rs 200 crore to promote MSMEs
� Extension of EPF support for business, organised workers for another 3 months
� Rs 30,000 crore special liquidity scheme for NBFC/HFC/MFIs
� Rs 45,000 crore partial credit guarantee scheme 2.0 for liabilities of NBFCs/MFIs
� Rs 90,000 crore liquidity injection for stressed discoms
� Relief to contractors given by providing extension of up to 6 months to complete projects
l States are being advised to invoke the force
majeure clause under RERA
� Reduction in rates of Tax Deduction at Source, Tax Collected at Source by 25 per cent for specified non-salaried payments
� Extension of deadline for payment without additional amount under �Vivad Se Vishwas� scheme extended till December 31
