FM announces Rs 20 trillion economic stimulus package in a bid to build a self-reliant India

The vision for a self-reliant India hinges on five key parameters – Economy, Infrastructure, Technology-driven Systems, Vibrant Demography and Demand

FM announces Rs 20 trillion economic stimulus package in a bid to build a self-reliant India

In his address to the nation on May 12, Prime Minister Narendra Modi laid out his vision for a self-reliant India that hinges on five key parameters – Economy, Infrastructure, Technology-driven Systems, Vibrant Demography and Demand.

Expanding on the vision, Finance Minister Ms Nirmala Sitharaman made a host of announcements on Wednesday, May 13 aimed at negating the impact of the Coronavirus triggered lockdown and rekindling the economy. Termed the ‘Atmanirbhar Bharat Abhiyaan’ or Self-Reliant India Movement, the FM highlighted various efforts the government is undertaking.

Benefits for the poor and marginalised

About 80 crore people who have lost their means of livelihood will be able to claim food and cash benefits. About five kg of wheat per person and one kg of pulses per household will be available for the next three months, while another eight crore poor families will receive free gas cylinders for the next three months. 

Twenty crore women Jan Dhan account holders will receive Rs 500 per month for next 3 months, and another three crore poor senior citizens, widows and Divyang to receive an ex-gratia of Rs 1,000 each. On the other hand, about 8.7 crore farmers will receive Rs 2,000 each under the PM-KISAN fund.

The wages of MNEGRA workers to be increased from Rs 182 to Rs 202, that will benefit over 13 crore families. 

Related: FM Sitharaman announces economic relief measures to quash coronavirus impact 

Liquidity measures introduced by the Reserve Bank of India (RBI)

The Central Bank has reduced the Cash Reserve Ratio (CRR) that has resulted in liquidity enhancement of Rs 1,37,000 crore, allowing banks to make additional borrowings under the Marginal Standing Facility (MSF).

There will be special refinancing facilities offered to state-owned agencies NABARD, SIDBI and the NHB to the tune of Rs 50,000 crore at Repo Rates.

A Special Liquidity Facility (SLF) amounting to Rs 50,000 crore will be provided to Mutual Funds to alleviate intensified liquidity pressures.

Related: Why keep money in a savings account when you can invest in these liquid mutual funds? 

Stimulus for MSMEs

The margins for availing working capital finance have been reduced, while a three-month moratorium will be available on repayment of instalment and interest on all term loans.

MSMEs will be able to avail of automatic collateral-free loans to offset operational liabilities, and restart business. A total of Rs 3 lakh crore will be available to 45 lakh organisations that generate a turnover of up to Rs 100 crore by October 31, 2020. 

An additional Rs 20,000 crore will be available as subordinate debt for stressed MSMEs. The loan will be disbursed via banks, which in turn will be infused as equity in the business.

Another Rs 50,000 crore will be made available as equity through Funds of Funds for businesses looking to scale up in size and capacity with an aim to get listed on the stock exchange in the future.

With a view to minimise international competition, procurement tenders for the Government up to Rs 200 crore will be exclusively directed towards MSMEs.

Related: Initiatives by the Indian government to boost startups in India 

Relaxation in statutory and compliance matters 

The due date for filing of original, as well as revised income-tax returns for the FY 2018-19 has been extended from July 31, and October 31, 2020 to November 30, 2020, and tax audit from September 30, 2020 to October 31 ,2020. GST returns due for March, April and May too can be paid till June 30, 2020.

There will be a 25% reduction in Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) for non-salary payments, such as payment of professional fees, interest, rent, dividend, commission, brokerage, etc. This move is expected to release liquidity of up to Rs 50,000 crore.

Additionally, Income Tax refunds have been issued for over 14 lakh tax payers, totalling to about Rs 14,000 crore. 

Other initiatives

The government will launch a Special Liquidity Scheme that will invest in debt paper of NBFCs/ HFCs/ MFIs and provide liquidity support to these institutions. 

Power distribution companies to receive a liquidity injection of Rs 90,000 crore in lieu of receivables.

Real estate developers and government contractors will receive a six-month extension under RERA to complete their projects. Government’s social welfare and health schemes, read to find out if you are eligible?

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