Finance Minister announce measures for relief and credit support related to businesses, especially MSMEs to support Indian Economy’s fight against COVID-19 (2024)

Ministry of Finance

Posted On: 13 MAY 2020 6:39PM by PIB Delhi

  • 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 of MSME and other Measures for MSME
  • No Global tenders for Government tenders of uptoRs 200 crore
  • Extending the Employees Provident Fund Support for business and organised workers for another 3 months for salary months of June, July and August 2020
  • EPF Contribution to be reduced for Employers and Employees for 3 months to 10% from 12% for all establishments covered by EPFO for next 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 DISCOMs
  • Relief to Contractors given by extension of up to six months for completion of contractual obligations, including in respect of EPC and concession agreements
  • Relief to Real Estate Projects the registration and completion date for all registered projects will be extended up to six months.
  • Tax relief to business as pending income tax refunds to charitable trusts and non-corporate businesses and professions to be issued immediately
  • Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at Source” by 25% for the remaining period of FY 20-21
  • Due Dates for various tax relatedcompliances extended

Hon’ble Prime Minister Shri Narendra Modi yesterday announced a Special economic and comprehensive package of Rs 20 lakh crores - equivalent to 10% of India’s GDP. He gave a clarion call forआत्मनिर्भरभारतअभियानor Self-Reliant India Movement. He also outlined five pillars of Aatmanirbhar Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand.

During the press conference here today, Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman said in her opening remarks that Prime Minister Shri Narendra Modi had laid out a comprehensive vision in his address to the Nation yesterday. She further said that after spending considerable time, the Prime Minister has himself ensured that inputs obtained from widespread consultation form a part of economic package in fight against COVID-19.

“Essentially, the goal is to build a self-reliant India that is why the Economic Package is calledAatma Nirbhar Bharat Abhiyaan.Citing the pillars on which we seek to build Aatma Nirbhar Bharat Abhiyaan, Smt. Sitharaman said our focus would be on land, labour, liquidity and law.

The Finance Minister further said that the Government under the leadership of Prime Minister Shri Narendra Modi has been listening and is a responsive Government, hence it is fitting to recall some reforms which have been undertaken since 2014.

“Soon after Budget 2020 came COVID-19 and within hours of the announcement of Lockdown 1.0, Pradhan Mantri Garib Kalyan Yojna (PMGKY) was announced,” Smt. Sitharaman said. She further said that we are going to build on this package.

“Beginning today, for the next few days, I shall be coming here with the entire team of the Ministry of Finance to detail the Prime Minister’s vision for Aatma Nirbhar Bharat laid out by the Prime Minister yesterday,” Smt Sitharaman said.

Smt. Nirmala Sitharaman today announced measures focused onGetting back to worki.e., enabling employees and employers, businesses, especially Micro Small and Medium Enterprises, to get back to production and workers back to gainful employment. Efforts to strengthen Non-Banking Finance Institutions (NBFCs), Housing Finance Companies (HFCs), Micro Finance Sector and Power Sector were also unfolded. Other than this, the tax relief to business, relief from contractual commitments to contractors in public procurement and compliance relief to real estate sector were also covered.

Over the last five years, the Government has actively taken various measures for the industry and MSME. For the Real Estate sector, the Real Estate (Regulation and Development) Act [RERA] was enacted in 2016 to bring in more transparency into the industry. A special fund for affordable and middle income housing was set up last year to help with the stress in this segment. To help MSMEs with the issue of delayed payment by any Government department or PSUs, Samadhaan Portal was launched in 2017. A Fund of Funds for startups was set up under SIDBI to boost entrepreneurship in the country and various other credit guarantee schemes to help flow of credit to the MSMEs.

Following measures were announced today:-

  1. Rs3 lakhcroreEmergency Working Capital Facility for Businesses, includingMSMEs

To provide relief to the business, additional working capital finance of 20% of the outstanding credit as on 29 February 2020, in the form of a Term Loan at a concessional rate of interest will be provided. This will be available to units with upto Rs 25 crore outstanding and turnover of up to Rs 100 crore whose accounts are standard.The units will not have to provide any guarantee or collateral of their own. The amount will be 100% guaranteed by the Government of India providing a total liquidity ofRs. 3.0 lakh crores to more than 45 lakh MSMEs.

  1. Rs20,000croreSubordinate Debt for Stressed MSMEs

Provision made forRs. 20,000 crsubordinate debt for two lakh MSMEswhich areNPA or are stressed. Government willsupport them withRs. 4,000 Cr.to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). Banks are expected to provide the subordinate-debt to promoters of such MSMEsequal to 15% of his existing stake in the unitsubject to amaximum of Rs 75 lakhs.

  1. Rs50,000croresequity infusion through MSME Fund of Funds

Govt will set up a Fund of Funds with a corpus of Rs 10,000 crore that will provide equity funding support for MSMEs. The Fund of Funds shall be operated through a Mother and a few Daughter funds. It is expected that with leverage of 1:4 at the level of daughter funds, the Fund of Funds will be able to mobilise equity of about Rs 50,000 crores.

  1. New definition of MSME

Definition of MSME will be revised by raising the Investment limit. An additional criteria of turnover also being introduced. The distinction between manufacturing and service sector will also be eliminated.

  1. Other Measures for MSME

e-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions. MSME receivables from Government and CPSEs will be released in 45 days

  1. No Global tenders for Government tenders ofup toRs200crores.

General Financial Rules (GFR) of the Government will be amended to disallow global tender enquiries in procurement of Goods and Services of value of less than Rs 200 crores

  1. Employees Provident Fund Support for business and organised workers

The scheme introduced as part of PMGKP under which Government of India contributes 12% of salary each on behalf of both employer and employee to EPF will be extended by another 3 months for salary months of June, July and August 2020. Total benefits accrued is about Rs 2500 crores to 72.22 lakh employees.

  1. EPF Contribution to be reduced for Employers and Employees for 3 months

Statutory PF contribution of both employer and employee reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months. This will provide liquidity of about Rs.2250 Crore per month.

  1. Rs30,000croresSpecialLiquidityScheme for NBFC/HFC/MFIs

Government will launch Rs 30,000 crore Special Liquidity Scheme, liquidity being provided by RBI. Investment will be made in primary and secondary market transactions in investment grade debt paper of NBFCs, HFCs and MFIs. This will be 100 percent guaranteed by the Government of India.

  1. Rs45,000croresPartial credit guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs

Existing Partial Credit Guarantee scheme is being revamped and now will be extended to cover the borrowings of lower rated NBFCs, HFCs and other Micro Finance Institutions (MFIs). Government of India will provide 20 percent first loss sovereign guarantee to Public Sector Banks.

  1. Rs90,000croreLiquidity Injection for DISCOMs

Power Finance Corporation and Rural Electrification Corporation will infuse liquidity in the DISCOMS to the extent of Rs 90000 crores in two equal instalments. This amount will be used by DISCOMS to pay their dues to Transmission and Generation companies. Further, CPSE GENCOs will give a rebate to DISCOMS on the condition that the same is passed on to the final consumers as a relief towards their fixed charges.

  1. Relief to Contractors

All central agencies like Railways, Ministry of Road Transport and Highways and CPWD will give extension of up to 6 months for completion of contractual obligations, including in respect of EPC and concession agreements

  1. Relief to Real Estate Projects

State Governments are being advised to invoke the Force Majeure clause under RERA. The registration and completion date for all registered projects will be extended up to 6 months and may be further extended by another 3 months based on the State’s situation. Various statutory compliances under RERA will also be extended concurrently.

  1. Tax Relief to Business

The pending income tax refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives shall be issued immediately.

  1. Tax related measures
  • Reduction in Rates of‘Tax Deduction at Source’and‘Tax Collected at Source”-The TDS rates for all non-salaried payment to residents, and tax collected at source rate will be reduced by 25 percent of the specified rates for the remaining period of FY 20-21.This will provided liquidity to the tune ofRs50,000Crore.
  • The due date of all Income Tax Returns for Assessment Year 2020-21 will be extended to 30 November, 2020. Similarly, tax audit due date will be extended to 31 October 2020.
  • The date for making payment without additional amount underthe“VivadSeVishwas” scheme will be extended to 31 December, 2020.

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I'm an expert in economic policies and government financial measures, having closely followed and analyzed various fiscal and monetary strategies worldwide. My expertise is underscored by a comprehensive understanding of the principles and intricacies of financial systems, policy implementations, and economic indicators.

Now, let's delve into the information provided in the article related to the Ministry of Finance's announcement on May 13, 2020:

  1. Emergency Working Capital Facility for Businesses, including MSMEs (Rs 3 lakh crore):

    • Additional working capital finance of 20% of the outstanding credit as of February 29, 2020, will be provided as a term loan at a concessional interest rate.
    • Available for units with up to Rs 25 crore outstanding and turnover of up to Rs 100 crore.
    • No guarantee or collateral required; 100% guaranteed by the Government of India.
  2. Subordinate Debt for Stressed MSMEs (Rs 20,000 crore):

    • Provision of Rs. 20,000 crores for subordinate debt for stressed MSMEs.
    • Government support of Rs. 4,000 crores to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE).
    • Banks expected to provide subordinate debt to promoters of stressed MSMEs.
  3. Equity Infusion through MSME Fund of Funds (Rs 50,000 crore):

    • A Fund of Funds with a corpus of Rs 10,000 crore to provide equity funding support for MSMEs.
    • Operated through a Mother and a few Daughter funds, aiming to mobilize equity of about Rs 50,000 crores.
  4. New Definition of MSME:

    • Revision of the definition of MSME by raising the investment limit and introducing turnover as an additional criterion.
    • Elimination of the distinction between manufacturing and service sectors.
  5. Other Measures for MSMEs:

    • Promotion of e-market linkage for MSMEs.
    • Release of MSME receivables from Government and CPSEs within 45 days.
    • No global tenders for government tenders up to Rs 200 crores.
  6. Employees Provident Fund Support:

    • Extension of the Employees Provident Fund (EPF) Support for businesses and organized workers for another 3 months (June, July, and August 2020).
  7. EPF Contribution Reduction:

    • Reduction of statutory EPF contribution for both employers and employees to 10% from the existing 12% for the next 3 months.
  8. Special Liquidity Schemes:

    • Rs 30,000 crore Special Liquidity Scheme for NBFC/HFC/MFIs with 100% government guarantee.
    • Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for liabilities of NBFCs/MFIs.
  9. Liquidity Injection for DISCOMs (Rs 90,000 crore):

    • Power Finance Corporation and Rural Electrification Corporation to infuse liquidity in DISCOMs to pay their dues to Transmission and Generation companies.
  10. Relief to Contractors and Real Estate Projects:

    • Extension of up to six months for completion of contractual obligations for central agencies.
    • State Governments advised to invoke the Force Majeure clause under RERA for real estate projects.
  11. Tax Relief Measures:

    • Immediate issuance of pending income tax refunds to charitable trusts and non-corporate businesses.
    • 25% reduction in TDS rates and Tax Collected at Source rates for the remaining period of FY 20-21, providing liquidity of Rs 50,000 crores.
    • Extension of due dates for Income Tax Returns and tax audit.

These measures were part of the Special economic and comprehensive package of Rs 20 lakh crores announced by Prime Minister Shri Narendra Modi to address the economic challenges posed by the COVID-19 pandemic.

Finance Minister announce measures for relief and credit support related to businesses, especially MSMEs to support Indian Economy’s fight against COVID-19 (2024)

FAQs

Finance Minister announce measures for relief and credit support related to businesses, especially MSMEs to support Indian Economy’s fight against COVID-19? ›

Finance Minister announce measures for relief and credit support related to businesses, especially MSMEs to support Indian Economy's fight against COVID-19. Relief to Real Estate Projects the registration and completion date for all registered projects will be extended up to six months.

Who is India's Finance Minister? ›

Finance Minister Nirmala Sitharaman and Chief Economic Advisor V. Anantha Nageswaran sounded caution in recent days about growing retail participation in the equity futures and options market.

Who was the first Finance Minister of independent India? ›

Detailed Solution. The correct answer is R. K. Shanmukham Chetty. RK Shanmukham Chetty served as the first Finance Minister of independent India from 1947 to 1949. He presented the first Union Budget of Independent India.

Who is the current minister of finance and corporate affairs of India? ›

Organization Directory
NameDesignationGroup / Division / Organization
Smt. Nirmala SitharamanMinisterMinistry of Corporate Affairs
Shri Rao Inderjit SinghMinister of StateMinistry of Corporate Affairs
Shri Manoj GovilSecretaryMinistry of Corporate Affairs

What is the role of a Finance Minister in India? ›

One of the senior most offices of the Union Cabinet, the finance minister is responsible for the fiscal policy of the government. A key duty of the Finance Minister is to present the annual Union Budget in Parliament, detailing the government's plan for taxation and spending in the coming financial year.

Who was the first finance minister of independent Assam? ›

After Independence, the first budget was presented by Late Bishnu Ram Medhi, the then Finance Minister of Assam on 11th March, 1948. The financial year for the Union and the State Government in India is from April to March, which was introduced in India from 1867.

Who was the first woman finance minister of Assam? ›

Ajanta Neog (born 1964) is an Indian politician who is currently serving as the Minister of Finance and Women and Child Development in the Government of Assam since May 2021. She is the first woman Finance Minister of Assam.

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To access Master Company/LLP Data click “View Company/LLP Master Data” link; to view Index of Charges, click 'View Index of Charges'; and to access signatory details, click on 'View Signatory Details' on the left hand side of this page. Enter the Company/LLP Name or CIN/LLPIN of the Company/LLP.

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Officers & Directors
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Feb 3, 2024

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Midsize or small business owners who cannot qualify for traditional business loans have the ability to secure a Merchant Cash Advance (MCA) . However, obtaining one differs from obtaining a secured or unsecured loan.

What are the roles of a financial manager? ›

Financial managers perform data analysis and advise senior managers on profit-maximizing ideas. Financial managers are responsible for the financial health of an organization. They create financial reports, direct investment activities, and develop plans for the long-term financial goals of their organization.

What is a budget and why is it necessary? ›

A budget is a financial spending plan that estimates income and expenses for a specific period. A budget allows a business to plan out expenses, reach business goals and anticipate operational changes.

How would you define finance? ›

Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government. This guide will unpack the question: what is finance?

Who was the first Indian finance minister in 1991? ›

Manmohan Singh served as the finance minister during the 1991 economic reforms. He was the finance minister in the PV Narasimha Rao government.

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Dr. Rajendra Prasad served as the first President of India, holding the office from January 26, 1950, until May 13, 1962.

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Achutha Menon also became elected to the Kerala Legislative Assembly, thus becoming the first Finance & Agricultural Minister of Kerala in the Ministry headed by E.M.S. Namboodirippad in 1957. He presented the first Budget of Kerala state on 7 June 1957.

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Rajkumari Amrit Kaur (1889–1964) is famously recognized as the first Health Minister of Independent India. She was born as a princess into the royal family of Kapurthala district, formerly a princely state in British Punjab.

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