New Delhi, May 13
Finance Minister Nirmala Sitharaman addressing a press conference to share details of the Rs 20 lakh crore package announced by Prime Minister Narendra Modi on Tuesday to tackle the impact of coronavirus on the economy as the country has been under a lockdown since March 25, has said, "Beginning today, for the next few days, I will be coming here and present to you in detail, the package the PM announced yesterday. Our explanation will span over the next few days," the Finance Minister said.
The Finance Minister said that Atma Nirbhar Bharat is a bid to spur growth and build a self-reliant India. "Atma-Nirbhar, you'd hear me say this often. Atma Nirbhar Bharat doesn't mean India becomes inward-looking or isolate itself - that will not happen. It is just a focus on being self-reliant and grow local brands and businesses," she said.
Quoting Prime Minister Narendra Modi from his Tuesday's televised address to the Nation, Nirmala Sitharaman said, "You heard the PM say that this is going to be rested on 5 important pillars - the economy, infrastructure, tech-driven systems, demography and demand. Focus will be on what can be defined as factors of production in today's language. Land, labour, capital and enterprise."
In a televised address to the Nation on Tuesday evening, PM Modi announced Rs 20 lakh crore - equivalent to 10 per cent of India's GDP -- to support an economy badly hit by the 50-day lockdown to fight the spread of COVID-19.
Here are the top announcements by Nirmala Sitharaman:
* Intention is to make local brands and build them to global level, a global value chain integration part of this vision. A confident India which can rest on strengths and also contribute to the world. Production of ventilators has grown rapidly, we have the capability and enterprise, we'll continue contributing to the globe. We are working tirelessly for the poor of the country, the migrants of the country, the farmers and small businesses of the country.
* We met here several times since the July budget in 2019 and thereafter when SMEs wanted intervention, and thereafter when COVID-19 came upon us all. It shows that you are dealing with a proactive, sensitive, consultative Government. PM Modi-led Government listens and is sensitive. I list before you the various reform-driven steps successfully taken, it is important to recall them, even as if talk about building an Atma-Nirbhar Bharat:
1) DBT based reforms for poor. Look at migrants, poor, DBT enabled us to directly put money into their accounts, they didn't even have to go to bank to collect it. Based on Jan Dhan, Aadhar and mobile tech, a revolution.
2) Micro-insurance schemes for poor such as PM-Awas and Ujjwala Yojna.
3) In agriculture: Fasal Beema Yojana, PM Kisan Yojana, we were able to frontload money to farmers during lockdown, wouldn't have been possible otherwise.
4) Public sector banks' clean-up. Public sector banks' recap. FDI liberalisation. Ease of Doing Business reforms. GST reforms. You are able to see what impact lockdown has had on small businesses.
5) Power sector reforms. India now a power surplus Nation, from shortages earlier.
6) Cleaning up of coal mine sector.
* Major steps for MSMEs:
1) Collateral-free automatic loan. Facility up to 3 lakh crore. These loans will have a 4 year tenure, 12-month moratorium to be given. These will be available till October 31, no guarantee fees. This will benefit 45 lakh units, so that they can resume activity and also safeguard jobs.
2) For standard MSMEs who couldn't move forward because of lockdown, you had that emergency credit line. Subordinate debt for stressed MSMEs. They have a problem of equity. Want to provide 20,000Cr liquidity. For this scheme, NPAs or stressed MSMEs, all will be eligible.
3) There is a fund being created for infusing about 50,000 crore equity into MSMEs. For those MSMEs who have potential and are viable.
4) MSMEs who may be doing viable situation but need hand-holding. This will also encourage them to get listed in the markets, which they can choose. Provisions for all 3 kinds, standard MSMEs, stressed MSMEs and viable MSMEs.
5) For Government procurement, tenders up to 200cr will no longer will be on global tender route. Global tenders will be disallowed in Govt procurement for tenders upto 200 crore. Majority of MSMEs were unable to supply big large firms who they were serving all the while. Suddenly the conditions became unmatchable and many couldn't participate in supply. This will make MSMEs do their business with a lot more confidence and carry on with it.
6) Post-Covid exhibitions would be difficult. Would ensure e-market linkage across the board so that they can find their market easily.
* MSME definition changed. Changed in favour of MSMEs. There was this fear that if they outgrow size, they'll lose benefits they'd get. Change so that they need not worry about growing in size, they'd still be able to get benefits. Investment limit, which defined MSME, is being revised upwards. Idea is that even with increased investment, you'd still be defined as MSME. Additional turnover criteria, apart from investment size.
Differentiation between manufacturing or service-based MSME being removed. They shall be defined similarly. So now your investment can be up to 1 crore, turnover up to 5 crore, you shall be called micro enterprise.
* Liquidity relief being given for all EPF establishments. In this, 12% which is paid by employer and 12 by employee contribution, we extend the support for another 3 months. Payments were made into eligible accounts by government for March, April and May. Some 3.6 lakh establishments benefited.
* What was given earlier for March, April and May, is being extended to another 3 months, would be infusing 2,500Cr liquidity and 7.22L employees will benefit.
* In order to provide more take home salaries, for those which havent been covered earlier, that is 100 employees with 90% drawing less than 15K, second now is statutory PF contribution being reduced to 10%. This reduction is not for govt. But govt employees in these PSUs will be given advantage of 10%. Liquidity relief of over 6000Cr for next 3 months.
* NBFCs, micro-finance institutions: It was felt that NBFCs were not able to get enough resources, particularly some had difficulties. 30,000CR special liquidity scheme. Investment in both primary and secondary transactions. This is taking and buying debt papers, they can be investment quality debt papers also. Expect impact on struggling NBFCs who need money to carry on with business. Partial credit guarantee scheme for NBFCs. 20%, first 20% to be borne by guarantor, that is government. Double AA rated papers and also below that, all will be included. Even unrated papers will be eligible for investments.
* Discoms facing unprecedented cash flow problems. They need help. You need all the states, discoms in serious crisis. Emergency liquidity injection to the extent of 90,000 crore. To all discoms, against all receivable they have. Now making a one-time provision to infuse that money into discoms and who in turn, this will be done with the state issuing guarantees. The customer, we want benefit to be passed on to customers, rebate for central firms who pass benefits to the final customers.
* All Government agencies, such as Railways, Highways, CPW etc, will now get 6 month extension, they can take additional 6 months to comply with contract conditions. In order to facilitate greater liquidity, government agencies will partially release bank guarantees, to the extent of partially completed contracts.