On Tuesday, Prime Minister Narendra Modi said the country should view the Covid-19 crisis as an opportunity to achieve economic self-reliance. In his address to the nation, he stressed on the importance of promoting “local” products. He called it Atmanirbhar Bharat Abhiyan (or Self-reliant India Mission) and said that in the days to come, his government will be unveiling the details of an economic package towards this aim, which, after including the earlier reliefs announced by Finance Minister Nirmala Sitharaman and the RBI, would be worth Rs 20 lakh crore — or 10 per cent of GDP in FY20.
Divergent views emerged from the Congress, with some leaders welcoming the package and others saying the Prime Minister has only given the country a “headline”. Party MP Manish Tewari tweeted, “@PMOIndia ‘s speech can be summed up in one word — Headline Hunting. A number — 20 lakh crores. No details.”
Read | PM Modi’s self-reliant India Mission economic package: Here’s the fine print
The Trinamool Congress was sceptical. “We saw the box today. We saw the wrapping paper today. But what is in the product. we don’t know. For that, we have to open the package tomorrow or day after. He (Modi) said 20 lakh crores, 10 per cent of GDP, but (there was a) little asterisk there saying some conditions apply.,” party leader Derek O’Brien said.
CPM general secretary Sitaram Yechury said it was difficult to comment on the package or the fourth phase of lockdown in the absence of details. He, however, said it was unfortunate that the Prime Minister did not speak about providing relief to the crores of migrant workers. “We were all expecting the Prime Minister to announce some facility or relief for them. But there was no word… And what about the lakhs of people who are hungry.”
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“The four big problems confronting India: distress of migrants, resources that States need, Hunger and Unemployment were not addressed at all,” Yechury said.
The government Wednesday broadened the definition of Micro, Small and Medium Enterprises (MSMEs) by revising the limit of investment in machinery or equipment and introducing a “turnover” criteria — a reform measure that seeks to reverse the traditional policy bias in favour of units staying small in order to qualify for benefits.
As per the proposal, for which amendments to the law will need to be made, micro enterprises will be those with investment of up to Rs 1 crore and turnover of up to Rs 5 crore — the earlier definition classified investments of up to Rs 25 lakh for manufacturing and up to Rs 10 lakh for services.
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For small enterprises, the classification covers up to Rs 10 crore in investment and Rs 50 crore in turnover, against investment of up to Rs 5 crore in manufacturing and up to Rs 2 crore in services.
For medium enterprises, the investment limit has been doubled for manufacturing enterprises from Rs 10 crore to Rs 20 crore and quadrupled for services from Rs 5 crore to Rs 20 crore, in addition to the turnover criteria of up to Rs 100 crore for both sectors in this size.Read more here
Banks are set to extend funds to lower rated non-banking financial companies and housing finance companies following the government’s decision to offer credit guarantee support on Wednesday. Banks which were pressing for a guarantee from the government to lend money to NBFCs despite the RBI opening a liquidity window for NBFCs and microfinance firms have welcomed this government guarantee announced in the stimulus package.
“The envisaged support of full credit guarantees to the lower rated NBFC and HFC entities will restore stability in financial markets and could act as a clear enabling factor for compressing credit spreads,” SBI Chairman Rajnish Kumar said.“The measures for MSME through guarantees, equity infusion and debt support will incentivize bank lending to MSMEs as well as providing crucial support to stressed entities in the current situation,” Kumar said. Read more here
The main thrust of Wednesday’s announcements was a relief to Medium, Small and Micro Enterprises (MSMEs) in the form of a massive increase in credit guarantees to them. There was, however, very little actual fiscal outgo that was announced. In other words, instead of directly infusing money into the economy or giving it directly to MSMEs in terms of a bailout package, the government has resorted to taking over the credit risk of MSMEs should they want to remain in business.
Loans to MSMEs are mostly given against property (as collateral) because often there isn’t a robust cash flow analysis available. But in times of crisis, like the one currently playing out, property prices fall and this inhibits the ability of MSMEs to seek loans. It also means that banks are less willing to extend loans. A credit guarantee by the government helps as it assures the bank that its loan will be repaid by the government in case the MSME falters. Full explained here
While the 16 specific announcements announced in the first tranche cut across sectors that range from MSME and Non Banking Finance Companies (NBFCs) to real estate and power distribution, the overarching theme was that of infusing liquidity in Nirmala Sitharaman's Wednesday announcement.Sitharaman said banks and NBFCs can provide emergency credit lines to MSMEs up to 20 per cent of their outstanding credit as on February 2, 2020, with these loans having a 4-year tenor, a 12-month moratorium on principal payments, and a cap on interest costs.
A total of Rs 3 lakh crore is projected to be disbursed under this scheme that will be open until October 31, 2020. Sitharaman said this measure could help nearly 45 lakh units to resume business activity.Read more here
Electrical equipment such as smartphones and computers are a key part of India’s import bill. The value addition in India’s electronics industry is limited to mostly assembly, while the country depends on imports to access most of the primary and critical components used to make them, including printed circuit boards (PCBs). For instance, around 88 per cent of the components used by the mobile handsets industry are imported from countries like China, according to the Confederation of Indian Industry. READ FULL EXPLAINED HERE
Finance Minister Nirmala Sitharaman on Wednesday announced a Rs 30,000 crore special liquidity scheme for non-banking financial institutions to provide credit support to the sector amid the coronavirus crisis.
Further, a Rs 45,000 crore partial credit guarantee scheme 2.0 was also unveiled for non-banking financial companies (NBFCs), housing finance companies (HFCs), and microfinance institutions (MFIs) with low credit rating to help them extend loans to individuals and MSMEs. Under the Rs 30,000 crore special liquidity scheme, the minister said investments will be made in both primary and secondary market transactions in investment-grade debt papers of these institutions.
Finance Minister Nirmala Sitharaman announced some details of the Atmanirbhar Bharat Abhiyan economic package on Wednesday. This is the second tranche of the package that includes past actions by the Reserve Bank of India as well as the first Covid-19 relief package announced during March and April.
What are credit guarantees?
Loans to MSMEs are mostly given against property (as collateral) because often there isn’t a robust cash flow analysis available. But in times of crisis, like the one that is currently on, property prices fall and this inhibits the ability of MSMEs to seek loans. It also means that banks are less willing to extend loans.
Rajan S Mathews, DG, COAI: “Finance Minister’s announcement is in line with the government’s aim to provide the necessary impetus to economic growth and build a ‘self-reliant’ India. We welcome the announcement of all pending payments within 45 days from PSEs to MSME sector. The telecom industry has unutilised GST input tax credit over INR 35,000 crore for which the sector has repeatedly demanded refund.
"Moreover, the total outstanding from PSUs is amounting to approx. INR 20,000 crore since long. We hope the Hon’ble Finance Minister, Smt Nirmala Sitharaman, in the course of next few announcements would give similar relief to the sector that has immensely contributed to keeping the country connected during last 25 years and has kept 1 bn people connected during the current lockdown situation.”
Odisha CM Naveen Patnaik on FM Nirmala Sitharaman's economic package announcement: The economic revival package announced by @FinMinIndia has given hope to the Micro, Small & Medium Enterprises sector in the country. The stimulus package will generate lakhs of jobs for workers in the vast #MSME sector.
The package for employment and economic revival will now largely mitigate the distress of working class who were impacted by #COVID19 pandemic and nation-wide lockdown thereafter.
The Left parties on Wednesday said the economic package announced by Finance Minister Nirmala Sitharaman failed to address the immediate concerns of people, describing it as a "farce" that propagated the policies which had in the first place led to an economic crisis even before the onset of the coronavirus pandemic.
"The so-called 'package' by Modi govt is a farce. Those who urgently and immediately need help are walking hungry on the roads or looking for a meal from somewhere. This is completely insensitive to the existential crisis being faced by crores.
"We are witnessing the pettiest form of politics from Modi govt. There is nothing for the state govts which have been asking for funds, as they are at the forefront of fighting the pandemic. Nothing for them, not even their legitimate dues!," CPI(M) general secretary Sitaram Yechury said in a tweet.
CPI general secretary D Raja said, "They had brought the economy to its knees even before the pandemic. From both the PM and the FM we were expecting some immediate relief for the working class and the migrants. This has not come. They did not address the issues of joblessness and hunger.
"The FM's address was just regurging and promotion of the government's economic policy over the last six years which had led to the economic crisis in the first place even before coronavirus." (PTI)
Punjab Chief Minister Amarinder Singh on Wednesday expressed disappointment at the Centre's alleged failure to address the humanitarian crisis resulting from the lockdown, saying immediate intervention in the unorganised labour sector should have been a top priority in the fiscal relief package.
Unveiling the first set of components of the Rs 20 lakh crore COVID-19 economic stimulus package announced by Prime Minister Narendra Modi, Sitharaman said Rs 90,000 crore liquidity infusion will be made in electricity distribution companies to help them fight the current financial stress.
Singh said it was unfortunate that the finance minister had not deem it fit to balance the needs of the MSMEs, NBFCs and the housing sector with the urgent requirements of the lakhs of migrant labourers facing unprecedented problems due to the current crisis.
Citing the prime minister's emphasis on securing 'jaan' with 'jahan', the chief minister said the first set of announcements by the finance minister showed no intent at protecting lives. (PTI)
Union Home Minister Amit Shah on Wednesday said the Narendra Modi government is committed to reviving the economy, help small businesses and boost employment in the challenging time of coronavirus pandemic.
In a series of tweets, Shah said the central government is doing everything possible to help those in the business sector as they may face financial stress while resuming their work following the lockdown to combat the coronavirus pandemic.
"I thank PM @narendramodi and FM @nsitharaman for these unprecedented steps, targeted at assisting MSMEs, cope with challenges of COVID-19.
"It reflects PM Modi's commitment to revive our economy, help small businesses and boost employment," he tweeted with the hashtag '#AatmaNirbharBharatAbhiyan'.
Karnataka Chief Minister B S Yediyurappa on Wednesday welcomed the Centre's Rs three lakh crore financial support to the industrial sector which is one of the worst hit due to the coronavirus induced lockdown since March 24.
Yediyurappa lauded Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for announcing Rs 20 lakh crore stimulus package to revive economy, which includes Rs three lakh crore to the MSMEs.
"This is a very timely and scientific move with expertise and collateral free loans for MSMEs will boost them to resume operations. This will benefit 45 lakh MSMEs in the country," PTI quoted Yediyurappa as saying.
The Rs 90,000 crore aid to electricity supply companies of the states, income tax exemption and return of Rs 50,000 crore, payment of Rs 6,750 crore towards Employees Provident Fund contribution of employees and the entrepreneurs and Rs 30,000 crore aid for non-banking finance institutions will help the industries and employees, the chief minister noted.
He was optimistic that the no-global tender for upto Rs 200 crore will stimulate the growth of Indian companies.
Hailing the Central government, Yediyurappa said, "None of the Covid-19 affected countries have announced such a huge economic revival package for the industrial sector in the world. This is a bold step towards motivating people to exit lockdown system to work and earn their bread." (PTI)
Electrical equipment such as smartphones and computers are a key part of India’s import bill. The value addition in India’s electronics industry is limited to mostly assembly, while the country depends on imports to access most of the primary and critical components used to make them, including printed circuit boards (PCBs). For instance, around 88 per cent of the components used by the mobile handsets industry are imported from countries like China, according to the Confederation of Indian Industry.
Over 60 per cent of the country’s medical devices are imported as well. Other products heavily imported into the country are cells and modules used by the country’s solar power industry. Read more in this explained
Madhya Pradesh CM Shivraj Singh Chouhan: "Relief measures for MSME sector announced by FM today, are truly the roadmap to build Aatmanirbhar Bharat. I believe that the economic package by PM will help MSMEs. Small industries, micro industries and medium industries will be boosted and it'll increase job opportunities."
"This will also boost local, boost 'swadeshi'. We'll walk towards self-reliance. If global tenders will be disallowed in govt procurement tenders up to Rs 200 cr then our local companies, especially the small ones, will gain a new strength." (ANI)
Prime Minister Narendra Modi tweets on the announcements made by FM Nirmala Sitharaman today: "Today’s announcements by FM @nsitharaman will go a long way in addressing issues faced by businesses, especially MSMEs. The steps announced will boost liquidity, empower the entrepreneurs and strengthen their competitive spirit."
N Venkatram, CEO, Deloitte India on the announcements made by Finance Minister Nirmala Sitharaman today
“The announcement made over the last two days is one of the most important steps we are taking post Independence. Swadeshi 2.0 will be about an industrial resurgence, welcoming foreign manufacturers and technology into India, and creating world class products in India for domestic consumption as well as for export. A confident, stronger, dependable and predictable India is key to active participation in the global supply chain.
This is a long term story we are building. We should not look for easy solutions for the short term, but aim to be in a better and financially stronger place in 3 to 5 years. Revival of entrepreneurship and required regulatory changes will result in a radically transformed India in 10 years from now.”
Anuj Puri, Chairman – ANAROCK Property Consultant on FM Nirmala Sitharaman's announcement of relief package
Today’s announcement is much in line with the government’s aim to spur economic growth and build a ‘self-reliant’ India. In the first of the series of announcements the FM will make over the next few days, the real estate sector, NBFCS/HFCs and MSMEs got a major boost on day one.Providing a major relief to real estate developers, the government has extended the timeline for project completions and registration by 6 months. This is a big move that will destress developers significantly, since construction activity had been halted all across the country. Homebuyers’ wait for their homes will get extended by this move, but this was in any case inevitable.
Bank Bazaar CEO Adhil Shetty: "We welcome the slew of measures announced by Finance Minister Nirmala Sitharaman to ease the liquidity problems of MSMEs through fresh cash infusions, collateral-free loans with moratoriums, and by loosening their tax compliance compunctions. We would also urge the government and the regulator to enable 100% contactless access to credit to help MSMEs avail the proposed loans digitally. MSMEs need quick access to credit but they also want to avoid the health risks inherent to face-to-face meetings with lending institutions. It is therefore imperative now to make the entire credit supply chain—including KYC—100% digital. Credit seekers must be allowed to apply for loans via their phones and to complete their KYC digitally via Video Customer Identification Process or Aadhaar OTP-based e-KYC. A 100% contactless credit supply chain not only helps solve ongoing liquidity problems but also prepares us for a future where the health risks become endemic. The coronavirus may return in a second wave, and operationalising digitally now is the only way out."
P Chidambaram on change in definition of MSMEs: Broadly speaking, I welcome the changes in the chaneg in definition of MSMEs announced by the government.
P Chidambaram on question on whether the measures announced by FM would create demand: I have not heard that the liquidity measures result in the demand side. Liquidity measures result in the supply side. Demand is stimulated by fiscal measures. Except for the modest measures for 45 lakh MSMEs, which also leaves out the majority of 6.3 crore MSMEs, there is nothing which is going to generate demand in the economy.
P Chidambaram on measures announced by FM Nirmala Sitharaman under Mission Atmanirbhar Bharat: Nothing there in today's announcement for middle class. TDS has been reduced which is a liquidity measures. Income tax filing has been extended but that again is a responsive measure. But we ask again where are the fiscal stimulus.
P Chidambaram on measures announced by FM Nirmala Sitharaman under Mission Atmanirbhar Bharat:The FM announced some support measures for MSMEs, although my comment is the measures were skewed in favour of the larger MSMEs (about 45 lakh MSMEs). I think the bulk of the 6.3 crore MSMEs were left high and dry. We welcome the offer of subordinate debt (Rs 20,000 crore) and equity corpus fund (Rs 10,000 crore), but we will await the ‘terms and conditions’. The devil is in the detail. On the credit guarantee fund, It is not the entire Fund that will be actually spent. The expenditure will be limited to the extent of NPAs in the outstanding guaranteed credit to MSMEs. Assuming an NPA level of 20-50 per cent, the actual expenditure over the period of the loans (which may be years) will be a maximum of Rs 3,00,000 crore.FM announced the liquidity measures but where is the fiscal stimulus? Where will the money come from to put in people's pockets? This whole package is nearly Rs 3.7 lakh crore liquidity package. We ask where is the rest Rs 16.4 lakh crore announced by the prime minister yesterday.
P Chidambaram on measures announced by FM Nirmala Sitharaman under Mission Atmanirbhar Bharat: No mention in FM's address on measures to give ration to rural poor and arrange for the movement of migrants walking home. Migrants feel cheated. There is also nothing by way of cash transfer to the bottom half of the population - 13 crore families who have been pushed into destitution.
Comgress leader P Chidambaram on measures announced by FM Nirmala Sitharaman under Mission Atmanirbhar Bharat: There's absolutely nothing in the measures announced by FM today for poor migrants who are walking back to their homes. There's also nothing on the cash transfer to poor people.
Dr Partha Chatterjee, Dean - International Partnerships, Professor and Head of the Economics Department, Shiv Nadar University: “The economic relief measures announced under the Atmanirbhar Bharat are welcome steps, particularly those related to MSME sector. The decision to changing the definition of MSME’s will certainly help them grow, and benefit larger number of firms. The government guarantee announced in the package is sure to help the liquidity transmission, which is badly required by this sector. While government guarantees will not impact fiscal deficits, but will impact the credit rating and may increase the cost of borrowing. While the sentiment of not allowing global tender understandable, one does hope that this will not come at the cost of competition and efficiency. However, from where will the funding come still remains to be answered.”
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 and Tax audit from 30th September, 2020 to 31st October,2020.
FM Sitharaman: The need for change of definition of MSMEs was only to save them from stop receiving benefits under MSME scheme once they cross the Rs 200 crore revenue mark.
FM Sitharaman: Vivaad say Vishwas scheme extended upto December 31, 2020. No extra payment sought.
Date of assessments getting barred as on September 30, 2020 now being extended to December 31, 2020. Those getting barred on March 31, 2021 extended by six months.
FM Nirmala Sitharaman says: Reduce TDS and TCS rate by 25%, will apply to all payments. To last till March 31, 2021. Will release Rs 50,000 crore in the hands of people.
Direct Tax Measures announced
• All pending refunds to charitable trusts and noncorporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
• 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 and Tax audit from 30th September, 2020 to 31st October,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.
• In order to provide more funds at the disposal of the taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates.
• Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
• This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from tomorrow to 31st March, 2021.
• This measure will release Liquidity of Rs. 50,000 crore.
Date of Real Estate Projects under RERA has been extended
• Ministry of Housing and Urban Affairs will advise States/UTs and their Regulatory Authorities to the following effect:
• 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 upto 3 months, if needed
• Issue fresh ‘Project Registration Certificates’ automatically with revised timelines.
• Extend timelines for various statuary compliances under RERA concurrently.
• These measures will de-stress real estate developers and ensure completion of projects so that homebuyers are able to get delivery of their booked houses with new timelines.
Relief for real estate sector: Urban development ministry will issue advisory to states/ UTs so that Covid-19 period event be treated as a force majeure. Extension of registration and completion date certificates may be extended by six months (expiry as of March 25, 2020).
In a major relief to contractors, all Central agencies to provide an extension of up to 6 months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts: Finance Minister Nirmala Sitharaman.
• Extension of up to 6 months (without costs to contractor) to be provided by all Central Agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works Dept, etc)
• Covers construction/ works and goods and services contracts
• Covers obligations like completion of work, intermediate milestones etc. and extension of Concession period in PPP contracts
• Government agencies to partially release bank guarantees, to the extent contracts are partially completed, to ease cash flows
DISCOM payables to Power Generation and Transmission Companies is currently Rs 94,000 cr
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
Linkage to specific activies/reforms: Digital payments facility by Discoms for consumers, liquidation of outstanding dues of state govts, plan to reduce financial and operations losses
Central Public Sector Generation Companies shall give rebate to Discoms which shall be passed on to the final consumers (industries)
DISCOMS PACKAGE: One-time provision by PFCs and RECs to infuse Rs 90,000 crore liquidity for discoms against receivables.
NBFCs, HFCs and MFIs: Rs 30,000 crore special liquidity scheme for investment in both primary and secondary markets to buy investment quality debt papers. Fully guaranteed by GoI.
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 liquidty side of balance sheets) of such entitues
First 20% of loss will be borne by the guarantor - GOI
AA paper and below including unrated paper eligible for investment
Statutory PF contribution of both employee and employer will be reduced to 10% each from existing 12% for all establishments covered by EPFO for next 3 months
CPSEs and State PSUs will however continue to contribute 12% as employer contributions
This scheme will be applicable for workers who are not eligible for 14% EPF support under PM Garib Kalyan Package
This will provied relief to about 6.5 lakh estabilishments covered under EPFO and about 4.3 cr such employees
Will provide liquidity of Rs 6750 cr to employers and employees over 3 months
Statutory PF contribution being reduced to 10% from 12% (employers need to pay only 10%). CPSUs and state PSUs will pay 12%, but employees can pay just 10%. Liquidity relief of Rs 6,750 crore for next three months.
Statutory PF contribution being reduced to 10% from 12% (employers need to pay only 10%). CPSUs and state PSUs will pay 12%, but employees can pay just 10%. Liquidity relief of Rs 6,750 crore for next three months @IndianExpress
— P Vaidyanathan Iyer (@iyervaidy) May 13, 2020
#Rs 2500 crore EPF support for business and workers for 3 more months
#Businesses continue to face financial stress
#Under Prandhan Mantri Garib Kalyan Package, payment of 12% of employer and 12% of employee contributions was made into EPF accounts of eligible establishments
#This support will be extended by another three months to salary months of June, July and August 2020
#This will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for 72.22 lakh employees
As businesses continue to face financial stress, the government has extended its payment of EPF contributions
Under Prandhan Mantri Garib Kalyan Package, payment of 12% of employer and 12% of employee contributions was made into EPF accounts of eligible establishments
This support will be extended by another three months to salary months of June, July and August 2020
This will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for 72.22 lakh employees
FM Sitharaman: E-Market linkage for SMES since trade fairs and exhibitions may not be held post-Covid. All receivables of MSMEs will be cleared by GoI and PSUs within next 45 days.
Indian MSMEs and other companies have often faced unfair competition from foreign companies
Global tenders will be disallowed in government procurement tenders upto Rs 200 cr
Necessary amendments to be brought about in General Financial Rules
For government procurement, tenders upto Rs 200 crore will no longer be under global tender route. Big benefit to MSMEs, which used to get disqualified, and disallowed from participation.
New definition of MSMEs
Low threshold in MSME definition have created fear among MSMEs of graduating out of the benefits and hence killing the urge to grow
What was it earlier?
Manufacturing enterprises:
Micro: with investments less than Rs 25 lakh
Small: with investments less than Rs 5 cr
Medium with investments less than Rs 10 cr
Services:
Micro with investments less than Rs 10 lakh
Small with investments less than Rs 2 cr
Medium with investments of less than Rs 5 cr
What is new?
Manufacturing and services are now one classification.
Micro: Investments less than Rs 1 cr and turnover of less than Rs 5 cr
Small: Investment less than Rs 10 cr and turnover less than Rs 50 cr
Medium: Investment less than Rs 20 cr and turnover less than Rs 100 cr
Finance Minister Nirmala Sitharaman: Definition of MSMEs has been revised, investment limit to be revised upwards, additional criteria of turnover also being introduced.
Fund of Fund to infuse Rs 50,000 crore as equity for MSMEs which are viable businesses and need hand holding.
Finance Minister Nirmala Sitharaman said: "Government to provide stressed MSMEs with equity support; Government will facilitate the provision of Rs. 20,000 Crores as subordinate debt."
"This will enable 45 lakh MSME units to resume business activity and also safeguard jobs," she added.
The government will infuse Rs 50,000 crore for MSMEs, which are viable businesses but need hand holding due to Covid-19. FM Nirmala Sitharaman says a fund of fund will be created for this.
* MSMEs face severe shortage of equity
* Fund of funds with corpus of Rs 10,000 cr will be set up
* Will provide equity funding for MSMEs, with growth potential and visibility
* FOF will be oprated through a mother fund and few daughter funds
* Fund structure will help leverage Rs 50,000 cr of funds at daughter funds level
* Will help expand MSMEs size as well as capacity
* Will encourage MSMEs to get listed on main board of Stock Exchanges
* Govt will facilitate provisions of Rs 20000 cr as subordinate debt
* Two lakh MSMEs are likely to benefit
* Functioning MSMEs which are NPA or are stressed will be eligible
* Gov will provide a support of Rs 4000 cr to CGTMSE
* CGTSME will provide partial credit Guarantee support to banks
* Promoter of the MSMEs will be given debt by banks, which will then be infused by promoters as equity in the unit
#Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover eligible
#Loans to have 4 year tenor with moratorium of 12 months on Prinicipal repayment
Businesses/MSMEs have badly been hit due to Covid-19 and they need additioanl funding to meet operational liabilites built up, buy raw material and restart business
Emergency credit line to businesses/MSMEs from banks and NBFCs up to 20% of entire outstanding credit as on 29.2.2019
* Borrowers with up to Rs 25 cr outstanding and Rs 100 cr turnover are eligible
* Loans to have 4 year tenor with moratorium of 12 months on princial repayment
* Interest to be capped
* 100% credit guarantee cover to banks and NBFCs on principal and interest
* Scheme can be availed till 31 October 2020
* No guarantee fee, no fresh collateral
45 lakh units can resume business activity and safeguard jobs
MSME package: Rs 3 lakh crore collateral free loan, for those with Rs 25 crore outstanding loan or Rs 100 crore turnover. Loans with 4-year tenure, moratorium of 12 months. 100% credit guarantee to banks and NBFCs on principal and interest. To benefit 45 lakh units.
FM to announce 15 measures: six for micro, small and medium enterprises, PF, HFCs and MFIs, discoms, contractors, real estate and three tax measures.