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Nirmala Sitharaman Announces the First Part of Relief Package

May 14, 2020

Going ahead with the Prime Minister’s Atmanirbhar Bharat Abhiyan, the finance minister Nirmala Sitharaman today announced the first installment of the package. Today’s announced prominently focused on the MSME sector. Let us count the key takeaways of the MSME relief package.

MSME Relief Package

Change in definition of MSME

According to the new definition; Micro units will have investments up to 1Cr and turnover up to 5 Crores. Small units can have investments up till 10 Cr and Turnover till 50 Cr. Medium units with investment till Rs 20 cr, turnover up to Rs 100 crore.

Also, only Indian companies will be allowed for up to Rs 200 Crore government contracts, global tenders are disallowed. In addition to this, due to the current Covid-19 situation, e-linkages will be provided instead of trade fairs. The government and PSUs will clear the receivables of MSMEs in the next 45 days.

There will be no distinction between manufacturing and service sector MSMEs.

Liquidity Scheme for NBFCs

The MSME relief package has many announcements for Non-Bank Financial Institutions( NBFC). A special 30,000 Crore liquidity scheme is there for investing in investment-grade debt paper for NBFCs, HFCs, and MFIs. This is fully guaranteed by the government and is for the NBFC’s that also fund MSMEs.

Rs. 45,000 Crore partial credit guarantee for the NBFC’s and GOI will bear the first 20% loss.

What’s in For the Employees?

The MSME relief Package announced by Nirmala Sitharaman has given assistance to employees through EPF. The package gives all EPF establishments a liquidity relief of Rs. 2500 Crores. The scheme will help 72 Lakh employees since the GOI will pay EPF contribution for 3 months till August. EPFO that covered the EPF contribution of organizations and their employees is reduced from 12 % to 10% in order to infuse 6,750 crore liquidity into the organizations.

Other Details

The MSME relief package is giving a collateral-free loan of Rs 3 Lakh Crore for the businesses. This will benefit 45 lakh units. The move is aimed at saving jobs and the units can resume their work.

The stressed and nonperforming asset MSMEs have a subordinate debt provision of Rs. 20,000 Crores. The government will set up a fund of funds with Rs. 10,000 Crore corpus to help the MSMEs expand and list on markets.

In a relief to the taxpayer, Nirmala Sitharaman has extended the date of IT Return Filling till 30 November 2020, which earlier was July 31.

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Yogesh is fascinated by the colossal world of Microbes around us and is pursuing a career in Microbiology. He is an avid reader and ponders upon the current affairs, the insights of which are reflected through his writing. Just like the microbes he studies, Yogesh is an adaptable cool-headed guy who strives for a better version of himself. He also believes that there is no sincere love than the love of food.