In a bid to revive the economy post Covid-19 pandemic, Prime Minister Narendra Modi unveiled a Rs 20 lakh crore package, which is almost 10 per cent size of the Indian GDP. The package has been released under Atmanirbhar Bharat Abhiyan for all the sectors to benefit and has given a major impetus for the local brands. Today, in a press conference Nirmala Sitharaman, Finance Minister, Government of India has announced the details of the bailout package. Despite various announcements and measures, Tourism and hospitality which is 10 per cent contributor to the Indian GDP has not been mentioned.
Addressing the media Sitharaman said, “Prime Minister Narendra Modi has laid out a vision after various consultations. Essentially this is to spur growth and create self-reliant India. Economy, Infrastructure, Demographic, Demand, Technology and Digital are the five pillars of Atmanirbhar Bharat Abhiyan. This package will help to rebuild Self Reliant India. The ease of doing business, ease in compliance and regulations are included. Intention is to build local brands at global level.”
The Finance Minister has also stated that beginning today, for the next few days there will be various announcements putting out the vision which has been started. Also, the RBI is coming with a lot of liquidity infusion measures.
Indirectly, a lot of travel and hospitality companies are covered under the Micro, Small and Medium Enterprises (MSMEs) segment and today there have been various relief measures announced for this segment. Out of the 15 different measures, six measures have been announced for the MSMEs including;
Collateral free automatic loan for MSMEs which will give facility up to Rs. Three lakh crores, with moratorium for 12 months, this will be available till October 31, 2020. Sitharaman added, “This measure will benefit 45 lakh units to resume business. This is for standard MSMEs who have been affected by lockdown and are struggling to restart business post lockdown.”
She further said, “We will infuse Rs. 20,000 crores though infused debt provision to stressed MSMEs. Two lakh MSMEs will benefit out of this, NPAs or stressed MSMEs will benefit out of this. Also, Fund of Funds is being created by infusing Rs. 50,000 crores into MSMEs. This is for those MSMEs who are doing viable business and potential and require handholding. This will help them to expand capacities and will help them grow further.”
To further expand the benefits to the MSME segment, which is the backbone of the Indian industry, the definition has changed today to include more businesses and give a scope for them to grow further.
Sitharaman explained, “The definition of MSMEs has been changed in the favour of MSMEs and they look at growing and will also get benefits. Investment limit which defines an MSME is being revised. The idea is that, even with increased turnover and investment the business remains under MSMEs and can reap benefits. Additional criteria are brought in based on turnover, apart from investment size. The distinction between manufacturing and service units were different which has been removed. Now all will be defined similarly. Eg. earlier up to Rs. 25 lakhs investment was a micro unit, now it has been changed to Rs. 1 crore. Services will also be called micro under Rs. 1 crore. Turnover up to Rs. 5 crores will also be called micro.”
Also, for government procurements, any tenders up to Rs. 200 crores will no longer be under global tender route. This will benefit the MSMEs to bag the tenders. E-market linkage for MSMEs will happen. Any pending payments by Government and PSUs to MSMEs will be done within next 45 days all receivables will be cleared.”
Also, another relief announced under the direct tax segment was a 25 per cent reduction on all TDS and TCS. Finance Minister added, “We have from tomorrow till March 31, 2021 have reduced TDS and TCS rates by 25 per cent and this shall apply to all payments. This will be coming in from tomorrow. This reduction will release Rs. 50,000 crores in the hands of people.”