India knows its dependency very well. Therefore, it is on the way of sustainable development and Self-Dependent.
Finance Minister (FM) Nirmala Sitharaman on May 13 announced Rs 3 lakh crore collateral free automatic loan for businesses, including MSMEs. This will benefit 45 lakh small businesses, she said detailing parts of the Rs 20 lakh crore economic stimulus package. The loan will have 4 year tenure and will have 12 month moratorium. Subordinate debt will be provided for stressed MSMEs, she stated adding this would benefit 2 lakh such businesses.
In short, The Finance Minister stated that the stressed MSMEs need equity support. So the government will facilitate provision of above Rs 20,000 crore as subordinate debt, which will benefit 2 lakh MSMEs. Functioning MSMEs, which are NPA or are stressed will be eligible. The government will provide support of Rs 4,000 cr to CGTMSE, she asserted.
In the context of the relief to contractors in India, the finance ministry has been announced extension of upto 6 months to be provided by all central agencies like Railways, Ministry of Road Transport and Highways, Central Public Works Dept as well.
Thus, It will cover construction work and goods and services contracts, completion of works and intermediate milestones, and also concessional period in PPP contracts. In order to facilitate greater liquidity, government agencies will partially release bank guarantees to the extent of the completed contract so that cash flow improves.
On May 13, Finance Minister asserted that, Electricity distribution companies are also facing serious crisis; Rs 90,000 crore liquidity infusion for all power distribution companies. Rs 45,000 cr liquidity to be infused in NBFCs through partial credit guarantee scheme, she asserted.
Significantly, We shall not forget that we do have a responsibility towards the poor, needy, the migrants workers, divyang and the aged of the country. There is a collateral free loan that will give facility upto Rs 3 lakh crore for MSMEs, FM added.
FM said that, "Indian MSMEs and other companies have often faced unfair competition from foreign companies. Therefore, global tenders will be disallowed in Govt procurement tenders upto Rs 200 crore. Necessary amendments of General Financial Rules will be effected. It will be a step towards self reliant India and support Make in India. This will also help MSMEs to increase their businesses," she asserted.
More importantly, TDS Rates has been Reduced by 25%, the Reduced TDS rates by 25 percent. This is applicable on all payments - interest, rent, brokerage, supply, etc. This will be enforced from tomorrow till March 31, 2021. This reduction will release Rs 50,000 crore in hands of people, says Finance Minister.
In order to provide more take home salary for employees and to give relief to employers in payment of PF, EPF contribution is being reduced for businesses & workers for 3 months, amounting to liquidity support of Rs 6750 crores. Govt of India and Central Public Sector Enterprises will honour every MSME receivable in the next 45 days, she added in the press conference, Finance Minister asserted.
Thus, Global tenders to be disallowed in government procurement up to Rs 200 crores. This will make self-reliant India, will also then be able to serve 'Make in India. Rs 20,000 cr subordinate debt for stressed MSMEs to be provided; 2 lakh MSMEs to benefited.
However, The definition of MSMEs is being changed for their advantage so that they can grow in size and get benefits. Investment limit which defined MSMEs have been revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorised similarly, Finance Minister stated.
Despite all of this, From May 14 to March 31, 2021 TDS and TCS rate has been reduced by 25% of the existing rate and is applicable to all payments. It will release Rs 50,000 crore in the hands of the people instead of paying them as taxes, she added. The FM said that, Date of assessment getting barred as on September 30, 2020 is now being extended to December 31, 2020. And, those getting barred as on March 2021 is being extended to September 30, 2021, she asserted.