Nirmala Sitharaman Press Conference Highlights| Steps announced will boost liquidity, empower entrepreneurs!

This Rs 20 lakh crore package includes the previous Rs 1.7 lakh crore stimulus announced by the Finance Minister and steps taken by the RBI

• Finance Minister Nirmala Sitharaman addressing press conference on May 13, outlined the first tranche of the contours of India’s massive Rs 20 lakh crore fiscal stimulus announced by Prime Minister Narendra Modi.
• FM Sitharaman said the announcements were made in tranches. Present tranche will include measures as follows: 6 are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 for discoms, 1 for contractors, 1 for real estate sector, and 3 tax measures.
•  Basically the package is aimed to spur growth and build self-reliant India and accordingly named "Aatma Nirbhar Bharat Abhiyaan"
• 5 important pillars of economy (viz. economy, infrastructure, technology driven system, demography and demand) shall form basis of this Aatma Nirbhar Bharat Abhiyaan
• land-labour, liquidity and law - three areas to be focused while building India self-reliant

Reform measures proposed under the package

6 MAJOR STEPS FOR MSME

• Collateral free loan facility with 4 years maturity and 12 months moratorium on principal repayment- available till October 31, 2020 - this will benefits 45 lakh MSMEs employing 12 crore population
• Subordinate debt of 20,000/- crores for NPA/stressed MSMEs - benefiting 2 lakh MSME
• Fund of 50,000/- crores corpus will be set up to provide MSME growth support
• Definition of MSME changed - as per changed definition, following will be the classification criteria: 

 Investment limits revisions in existing definition - 

a)     Micro unit investment upgraded - Mfg sector - 25 lakh to 1 crore and for Service sector - 10 lakh to 1 crore

b)     Small - investment upto 10 crores

c)      Medium - investment upto 20 crores

 Additional criteria based on turnover (new)

a)     Micro - turnover upto 5 crore

b)     Small - turnover upto 50 crores

c)      Medium - turnover upto 100 crores

• For Govt. procurement - global tenders upto 200 crores will be disallowed, thus allowing MSMEs to bid for them now
• Within next 45 days CPSEs and Govt of India will release all receivables of MSMEs

EPF REFORMS

•  For entities employing upto 100 employees, Employer (12%) and Employee (12%) contribution for employees earning less than 15,000/- per month which were paid by GOI from Mar-May 2020 under its Garib Kalyan Yojana is now extended to another 3 months (Jun-Aug 2020)
•  For entities employing more than 100 employees, employer contribution is reduced to 10% from 12%. This is not applicable to State and Center govt organisations. This will give 6750 corres liquidity support

For NBFC-HFC and MFIs

•  Launched 30,000/- special liquidity scheme for buying debt papers of NBFC, HFCs or MFIs. It will also include investment papers. All these papers will be fully guaranteed by Govt. of India, thus giving them parity with govt. securities.  
•  Partial Credit Guarantee Scheme's scope is expanded by providing Govt. of India guarantee for upto first 20% loss. Even unrated papers shall be backed by Govt. of India. 

DISCOMS

•  One time cash infusion: PFC, REC will together infuse 90,000/- crores to all DISCOMS against their receivables. They DISCOMS shall provide state guarantee in return to avail such infusion.
• Benefit shall be passed to final customers by all DISCOMS

DISCLAIMER- This write-up is based on the understanding and interpretation of the author and the same is not intended to be professional advice.

Regards,

Shubham Katyal

ACS, B.COM

Legal& Secretarial Consultant