In his address to the nation, the Indian Prime Minister announced a stimulus package of Rs 20 lakh crore aimed at all sections of society and the economy. The Union Finance Minister (FM) announced the details of the package in five daily press briefings beginning 13 May 2020 and ending 17 May 2020.

The highlights of the measures announced are as follows:

1. First press briefing on 13 May 2020

The first press briefing addressed the concerns of sectors that included MSMEs, EPF, DISCOMS, Contractors, Real Estate and Taxation.

MSMEs

Finance Minister about MSMEs

MSMEs were singled out for special attention with six measures that included

  • Collateral-free automatic loans worth Rs 3 lakh crore guaranteed by the Central Government with liberal terms benefitting 45 lakh MSMEs
  • Rs 20,000 crore liquidity measure fully guaranteed by Central Government benefitting 2 lakh MSMEs
  • Rs 10,000 crore corpus for setting up Fund of Funds to generate Rs 50,000 crore equity for viable MSMEs
  • Change in definition of MSMEs and removal of distinction between manufacturing and services
  • No global tenders for government contracts up to Rs 200 crore value
  • Government to pay receivables to MSMEs for government contracts within 45 days

Additional Read – Nirmala Sitharaman announced measures for MSMEs in her press conference held on 13th May 2020

EPF

There are two measures announced for EPF:

  • Employees drawing less than Rs 15,000 per month will get extension of liquidity relief Of Rs 2,500 crore for another 3 months up to August 2020 benefitting 3.6 lakh entities
  • Employer’s contribution reduced to 10% from 12% for 3 months providing Rs 6,750 crore of liquidity to 72.2 lakh entities

NBFCs

NBFCs, Housing Finance Institutions and MFIs merited two measures:

  • Rs 30,000 crore liquidity infusion for buying investment quality debt papers fully guaranteed by the Central Government
  • Rs 45,000 crore liquidity infusion – Partial Credit Guarantee Scheme 2.0 – by purchasing commercial paper and bonds in which Central Government will bear first 20% loss

 DISCOMS

  • Rs 90,000 crore liquidity against receivables of DISCOMS under State Government guarantee

Contractors

  • Extension of contracts of Railways, Highways, Road Transport and CPWD by six months
  • Release of partial bank guarantees matching completed work

Real Estate

  • Treating COVID-19 period as an act of God
  • Extending registration date by 6 months for projects expiring on 25 March 2020

Taxation

  • 25% cut in TDS and TCS rate for non-salaried payments up to 31 March 2021 adding Rs 50,000 crore liquidity
  • Charitable institutions will receive immediate refunds
  • Extension of Vivad se Vishwas scheme until 31 December 2020
  • Extension of filing of ITRs until 30 November 2020  

2. Second press briefing on 14 May 2020

The second press briefing addressed the concerns of sectors that included migrant workers, small farmers, street vendors and middle-income group.

Finance Minister on Migrant Workers

Migrant workers

Migrant workers faced hardships due to income drying up on account of halting of the economy. The measures announced for them included

  • Free 5 kg of rice or wheat and 1 kg of chana per month for the next two months benefitting 8 crore migrant workers at a cost of Rs 3,500 crore incurred by Central Government
  • One Nation One Ration Card (ONORC) through national portability
  • Migrant worker returnees to get work under MGNREGS
  • Creation of Affordable Rental Housing Complexes (ARHC) in which migrant workers can rent accommodation under PM Awas Yojana

Additional Read – Nirmala Sitharaman 2nd Speech on Economic COVID Relief Package

MUDRA Shishu loan

  • Interest subvention of 2% for next 12 months under the MUDRA Shishu Loan scheme for those who have availed loans up to Rs 50,000 benefitting 3 crore people

Street Vendors

  • Rs 10,000 working capital loan facility to help them start work after lockdown benefitting 50 lakh street vendors

Middle Income Group – Affordable Housing

  • Middle-income group households will get extension of Credit-linked subsidy scheme (CLSS) up to March 2021 benefitting 5.8 lakh MIG households spurring investments of Rs 70,000 crore

Tribal Welfare

  • Rs 6,000 crore will be spent on creating jobs for tribal and adivasis under CAMPA (Compensatory Afforestation and Management Planning Authority)

Small and marginal farmers

  • Rs 30,000 crore for emergency working capital funding to farmers beyond the existing Rs 90,000 crore normal refinance route benefitting 3 crore farmers  

Kisan Credit Card

  • 2.5 crore more farmers including fishermen and animal husbandry farmers to get Kisan Credit Card scheme through which Rs 2 lakh credit flow will be generated

3. Third press briefing on 15 May 2020

The third press briefing addressed the concerns of disruptions in supply chain infrastructure in sectors such as agriculture, food processing, fisheries, animal husbandry, horticulture, herbal cultivation and beekeeping.

Finance Minister on Agriculture Infrastructure Fund

Agriculture Infrastructure Fund

  • Rs 1 lakh crore Agriculture Infrastructure Fund to fund infrastructure projects at aggregation points and farm-gate
  • Operation Green to encompass all fruits and vegetable products
  • Thrust to bee-keeping activities
  • Opening of borders for inter-state trade

Micro Food Enterprises

  • Rs 10,000 crore allotted for formalizing Micro Food Enterprises in line with “Vocal for Local with Global Outreach” intent benefitting 2 lakh enterprises

PM Matsya Sampada Yojana (Fisheries)

  • Rs 20,000 crore earmarked for marine, aquaculture and inland fisheries activities including cold chains and fishing harbours generating 55 lakh employment opportunities

Herbal Cultivation

  • Rs 4,000 crore for herbal cultivation spread over 1 million hectare of land

Animal Husbandry

  • Rs 15,000 crore Animal Husbandry Infrastructure Development Fund to incentivize private sector participation in dairies
  • Rs 13,343 crore outlay for National Animal Disease Control Programme to vaccinate 53 crore animals in the country

4. Fourth press briefing on 16 May 2020

The fourth press briefing announced policy initiatives aimed at eight sectors—coal, minerals, defence production, civil aviation, power distribution, social infrastructure, space and atomic energy.

Finance Minister on Coal and Mining Sector

Coal

  • Removing government monopoly, commercial mining will be opened on the basis of revenue-sharing mechanism
  • Rs 50,000 crore set aside for evacuation infrastructure

Mining sector

  • Structural reforms in mining of minerals through seamless composite exploration-cum-mining-cum-production regime
  • 500 mining blocks to be auctioned
  • Joint auction of bauxite and coal mineral blocks to help reduce cost of electricity generation
  • Removal of distinction between captive and non-captive mines to help improve efficiency in mining and production

Defence production

  • FDI limit in defence manufacturing increased to 74% from 49% under automatic route
  • Project Management Unit (PMU) to be set up to help contract management and determine requirements of weapons/platforms and overhaul trial and testing procedures
  • List of weapons/platforms banned for imports to be drawn up and list will be enlarged in the future
  • Reducing the defence import bill is a major objective

Civil aviation

  • Optimal utilization of Indian air space is planned to help reduce operational costs of airlines
  • Rs 13,000 crore earmarked for improving facilities to world standards in 12 airports
  • Rs 2,300 crore earmarked for building six more airports under PPP model

Power distribution sector

  • Privatizing power distribution companies in the union territories (UT)
  • Reforms in tariff policy covering consumer rights, promotion of industry and sustainability of the sector

Social-infrastructure

  • Rs 8,100 crore provision is made through viability gap funding (VGF) to meet immediate needs of social infrastructure projects
  • VGF is increased to 30% from the present 20%

Space sector

  • Increased participation of private sector in space projects including satellites, launches and space-based services with the active participation of ISRO
  • Creating geo-spatial data policy for providing remote-sensing data to tech-entrepreneurs

Atomic energy

  • Establishment of a research reactor under PPP model to produce medical isotopes to discover affordable treatment diseases including cancer
  • Establishment of facilities under PPP model to help food preservation through irradiation technology
  • Linking startup ecosystem with nuclear sector to synergize research facilities with tech-entrepreneurs

5. Fifth press briefing on 17 May 2020

The fifth press briefing announced steps covering various aspects such as MNREGA, health and education, COVID-19, Companies Act, Ease of Doing Business and  Public Sector Enterprises.

Finance Minister on Health and Education

MNREGA

  • Rs 40,000 crore added to the budgeted Rs 61,000 crore MNREGA scheme to generate 300 crore more person-days to help returning migrants

Health

  • Public expenditure on health will be increased
  • Health and wellness centres in rural and urban areas at grass root level will be expanded
  • Infectious disease block in hospitals to be set up in each district
  • Public health labs to be set up in each block

Education

  • Technology-driven education through DIKSHA – use of TV, radio, community radio and podcasts
  • One dedicated TV channel for each class from first to twelfth
  • PM e-VIDYA programme to be launched for multi-mode access to digital and online education
  • Special e-content for the visually and hearing-impaired students
  • Top 100 universities to start online courses by May 30
  • Manodarpan, a program to provide psycho-social support to students, teachers and families for mental health and emotional well-being to be launched immediately

Defaults under COVID-19

  • Debts related to COVID-19 to be excluded from defaults under IBC
  • No fresh insolvency proceedings for one year
  • Special insolvency framework for MSMEs to be notified under section 240-A of the IBC
  • Minimum threshold to initiate insolvency proceedings is raised to Rs 1 crore from the existing Rs 1 lakh, which will exclude a majority of MSMEs from action under IBC

Companies Act

  • Majority of compoundable offences sections under Companies Act being shifted to internal adjudicating mechanisms relieving courts and NCLT

Ease of doing business

  • Public companies can list securities directly in foreign jurisdictions
  • Private companies listing non-convertible debentures (NCDs) on the stock exchanges will not be considered as listed companies

Public Sector Enterprise

  • PSE policy to be tweaked to allow private sector to enter all sectors
  • Strategic sectors will have at least one PSE and private sector can also participate
  • PSEs in non-strategic sectors will be privatized while retaining  one to four PSEs n the sector
  • PSE structure will be rationalized under holding companies

State Governments

  • Rs 4.28 lakh crore additional borrowing by states as they are allowed to borrow up to 5 per cent of GSDP from the earlier 3 per cent subject to states undertaking reforms

The measures announced by the FM including the measures taken by the government prior to 12 May 2020 amount to Rs 21 lakh crore, perhaps the most comprehensive measures taken by any government in the history of independent India.  

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