Rs 3.7 lakh cr booster to revive MSMEs

* First tranche of stimulus out, Rs 6 lakh cr schemes unveiled

* Collateral-free loans to benefit 45 lakh small businesses

* Date to file IT returns extended from July 31 to November 30

* PF contribution of employees, employers reduced to 10%

Sandeep Dikshit

Tribune News Service

New Delhi, May 13

Detailing Prime Minister Narendra Modi’s Rs 20-lakh crore economic stimulus package, Union Finance Minister Nirmala Sitharaman announced a 25 per cent cut in the tax deducted at source (TDS), a two per cent interest subvention for PF contributions and a Rs 3.7 lakh crore loan package for micro, small and medium enterprises (MSMEs).

• Editorial: Mega stimulus package

Zilch for migrants: PC

Nothing for migrants. The govt must spend and borrow more and allow states to do so. — P Chidambaram, senior congress leader

As part of a series of press conferences that will detail the fine print of the PM’s stimulus package, Sitharaman also announced infusion of Rs 90,000 crore in cashless electricity distribution companies and Rs 75,000 crore for non-star performers among non-banking financial companies, housing finance companies and micro-finance institutions.

Aim to build local brands

The measures will help spur growth and build a very self-reliant India. They address ease of doing business and the intention is also to build local brands. — Nirmala Sitharaman, Finance minister

In all, the first tranche of the package unveiled by the Finance Minister amounts to over Rs 6 lakh crore of which about Rs 5.4 lakh crore will be loans from banks, Rs 50,000 crore in deferred tax and about Rs 21,000 crore from the Central Government. The amount foregone due to Centre’s contribution to six months of PF for small companies was not available.

Impactful package under the first tranche of the Atmanirbhar Bharat Abhiyan. The first phase targets key sectors of MSME, EPF, discoms and taxation among other major areas that are the most impacted. — Chandrajit Banerjee, Director General, CII

Sitharaman said several components of the package were directed at the mission of making India self-reliant (atmanirbhar Bharat), a phrase she translated in several Indian languages for the benefit of those who do not understand Hindi. “This is a phrase you will hear quite often,” she said in her opening remarks. Minister of State Anurag Thakur paraphrased Sitharaman’s remarks in Hindi.

The Rs 90,000-crore liquidity infusion in discoms would help them pay the power-generating companies, which she said, was an example of “atmanirbhar Bharat”. Another example was the government’s decision to stop issuing global tenders for its purchases of less than Rs 200 crore.

While radically revising the definition for MSMEs, Sitharaman said the loans would be under three heads — Rs 3 lakh crore for 45 lakh completely shut MSME units, Rs 20,000 crore via a trust to stressed units and a Rs 50,000-crore fund for viable but shaky units. The Finance Ministry’s contribution will be Rs 14,000 crore.

The government decided to bear both PF contributions of 3.6 lakh small companies for another three months and will pay two per cent PF in certain establishments that would cost the exchequer Rs 6,750 crore.

The government also extended the Vivaad se Vishwas income tax amnesty scheme till December 31 with no penalties. It also extended the due date for income tax returns to November 30, tax audits to October 3 and the barring of assessments to December 31.

For the real estate sector, the Urban Development Ministry will write to states to invoke the “force majeure” clause for ongoing contracts.

Six steps for small, medium units

Collateral-free loan of Rs3 lakh cr for businesses with 12-month moratorium. It will benefit 45 lakh units

Subordinate debt Rs20,000 cr to support stressed MSMEs

Equity infusion Rs50,000 cr for MSMEs that are viable but need handholding

Definition revised to allow MSMEs to expand & not lose benefits

No global tenders up to Rs200 cr for govt procurement

e-market linkages to be provided across the board in the absence of non-participation in trade fairs due to Covid. Government of India, PSUs will clear all receivables in next 45 days

For employers/ staff

IT returns date for filing returns extended from July 31 to Nov ember 30

EPF contribution for organisations, employees cut to 10% from 12%. For PSUs, however, it will remain 12%

FOR NBFCs/HFCs/MFIs 

Special liquidity Rs30,000-crore scheme for investing in NBFCs/HFCs and MFIs

Relief for discoms 

One-time infusion Rs90,000 cr for all power distribution companies

Other details

Realty projects deadline extended by 6 mths

TDS/TCS reduction of 25% in existing rates from May 14 till March 31, 2021

Vivaad se Vishwas scheme extended till Dec 31, 2020