IS 20 LAKH CRORE A JUMLA PUBLICITY!

May 13, 2020

Here are main take aways from Nirmala Sitaraman press briefing.

Peoples liabilities are the same. -

The interest rates didn't change. -

The tax rates aren't reduced. -

The GST rates remain the same.

nothing about stimulus find for migrant workers, farmers or middle class

nothing said about state and local governments

But, Government today has successfully been turned into a Financing Corporation. To be seen if these loans will be distributed now or another 5 years plan sorts. Still the government doesn’t get it...put the money in the hands of people..atleast a good percentage of it

Key Takeaways:

Six major steps for the revival of the MSME sector
1. Collateral free loan of Rs 3 lakh crores for MSMEs. This will benefit 45 lakh units so that they can resume work and save jobs.

2. For stressed MSMEs, Subordinate debt provision of Rs 20,000 cr has been announced for 2 lakh MSMEs. It will benefit those which are NPAs or stressed MSMEs.

3. Rs 50,000 crore equity infusion through Mother fund-Daughter fund for MSMES that are viable but need handholding. A fund of funds with corpus of Rs 10,000 crore will be set up to help these units expand capacity and help them list on Markets if they choose.

4. Definition of MSMEs has been revised to allow MSMEs to aim for expansion and not lose benefits. Also, there'll be no distinction between manufacturing & services sector MSMEs.

New definition: Micro units with investment till Rs 1 cr, turnover up to Rs 5 crore. Small units with investment till Rs 10 cr, turnover up to Rs 50 cr. Medium units with investment till Rs 20 cr, turnover up to Rs 100 crore.

5. Global tenders will be disallowed up to Rs 200 crore for government contracts.

6. Will ensure e-market linkages are provided across the board in the absence of non-participation in trade fairs due to Covid. Govt of India and PSUs will clear all the receivables in next 45 days.

For Employees
7. A liquidity relief of ₹2,500 crore EPF support is being given to all EPF establishments, EPF contribution will be paid by Govt. of India for another 3 months till August and will benefit more than 72 lakh employees.

8. Statutory EPF contribution for all organisations and their employees covered by EPFO has been reduced to 10% from 12% earlier. This doesn't apply to govt organisations. This will infuse Rs 6,750 cr liquidity into these organisations.

For NBFCs/HFCs/MFIs
9. Rs 30,000 crore special liquidity scheme for investing in investment grade debt paper of NBFCs, HFCs and MFIs. These NBFCs are those that are also funding MSMEs. These will be fully guaranteed by government of India.

10. Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. The first 20% loss will be borne by the guarantor that is government of India.

11. For Discoms, a one-time emergency liquidity injection of Rs 90,000 crore against all their receivables. The states will guarantee it.