Govt Rs 20 Trn Economic Package To Revive Economy
On 12th May 2020 our honourable Prime Minister announced Rs 20 trillion economic packages under “Atmanirbhar Bharat Abhiyan” to revive the Indian economy. The main motto of economic package is to provide fiscal stimulus which means increasing government spending or reducing taxes to boost the economy. Basically Atamanirbhar Bharat Abhiyan means “self-reliant India” that is ‘saw the world as a whole family’ as in itself be self-sufficient. Moreover, there are five pillars of self- reliant India. Economy which brings in quantum jump and not incremental change, infrastructure, technology driven system, Vibrant Demography means youth and human capital is highly skilled and there is full utilisation of demand and supply.
The economic package of Rs 20 trillion which is about 10% of GDP mainly focuses on land, labour, liquidity and laws. It will be divided among the labourers, middle class, cottage industry, MSMEs and industries among others. Several bold reforms which are necessary during this critical period are: supply chain reform for agriculture, rational tax system, simple and clear laws, capable human resource and strong financial system. Finance Minister has always been on the side of reform for better ease of living in the country. 14 different measures are taken in which 6 of these are for MSMEs, 2 are of EPF, 2 for NBFCs and MFIs, 1 to discoms, 1 to contractors, 1 real estate, and 3 tax measures. For MSMEs Rs 3 trillion Collateral- free Automatic Loans for business including MSMEs. As we all know that Businesses/ MSMEs have been badly affected due to COVID-19 so it needs additional funding to resume activity and safeguarding their jobs. Tenure is of 4 years and is 100% guaranteed. This will last till October 21, 2020. Rs 200 billion subordinate debt will be distributed to stressed MSMEs who need equity support. In this about two lakh MSMEs are likely to be benefited. For MSMEs needing handholding, amount of Rs 500 billion equity infusion through fund of funds. Fund of funds will be operated through a Mother Fund and few daughter funds. This will help to increase size as well as capacity of MSMEs. After announcement of the economic package definition of MSMEs have been changed so that they need not worry about growing in size and still avail of the benefits. Investment limit will be revived upwards to Rs 10 million as compared to Rs 25 lakh earlier In order to encourage use of local instead of global, therefore, Global tenders will be disallowed in Government procurement tenders up to Rs 2 billion. This will aid in making our country self-reliant and will also be able to serve ‘Make in India’. EPF (Employees’ Provident Fund) support for business and workers has been extended for the next 3 months, providing liquidity relief of Rs 25 billion Statutory PF contribution for those not covered earlier is being reduced to 10% from 12%. The reduction is not for Central government. This scheme applies in the case of the workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and also under its extension. This will render relief to about 6.5 lakh establishments which fall under the ambit of EPFO and about 43 million such employees. The government will launch Rs 300 billion Special Liquidity Scheme for NBFCs/ HFCs/ MFIs. As per this scheme, investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/ HFCs/ MFIs. Rs 450 billion Partial Credit Guarantee Scheme 2.0 for NBFCs. One-time liquidity infusion of Rs 900 billion has been created for all power distribution companies. This will enable DISCOMs to pay generation companies. These companies will eventually pass on benefits to customers. All Central agencies will provide an extension for a time period of 6 months, without cost to contractors, to obligations like completion of work pertaining to services contracts and construction of goods.
Due tax of all income tax return for FY 2019-20 will be extended from July 31, 2020 and October 31, 2020 to November 30,2020 and Tax audit from September 20.2020 to October 31, 2020. Hence, PM laid out a comprehensive vision which was laid out after wide consultations with several sections of the society. Essentially the package is to spur growth and enhance demand and to create an Atmanirbhar (self- reliant) India.
-By
Anushka Sharan
Student Reporter