The Government of India has announced its support to the Medium, Small and Micro Enterprises (MSMEs) hit by the Covid-19 lockdown.
A day after PM Modi announced a Rs 20 lakh crore relief package, the Finance Minister Nirmala Sitharaman addressed the nation on May 13, 2020.
Briefing about the ‘Stimulus Package 2.0’, Sitharaman said, “the package is essential to spur growth and help build a self-reliant India.”
Unveiling the measures under the new relief package, she announced Rs. 3 lakh crore in collateral-free loans to small businesses.
The Finance Minister assured of proper liquidity flow in non-banking institutions hit by the lockdown scenario.
An Rs. 90,000 crore has been allocated for liquidity infusion in electricity distribution firms.
The government also reduced the statutory obligation of employer contribution to Employee PF (EPF) from 12 percent to 10 percent.
She also announced an extension of the deadline for filing IT returns.
‘For A Self-reliant India’ : FM
In their separate address to the nation, PM Modi and the Finance Minister Sitharaman made a strong pitch to the idea of ‘Made in India,’ giving a higher value to domestic manufacturing.
“The measures will spur growth and build a self-reliant India. The intention is to build local brands and make them world-class. It’s not (about) looking inwards or (being) isolationist. It’s (about a) confident India that contributes to the globe,” Sitharaman said in her address to the nation.
Economist Madhavi Arora at Edelweiss FX and Rates lauds India’s response as ‘tepid’ compared to other nations.
She, however, says, “It needs to be seen how much will be in the form of direct budgetary support to gauge the immediate fiscal hit and the consequent funding sources.”
[Also Read: India Plans Rs 42,000 Cr for Mobile Manufacturing]
Indian Industry Response To ‘Stimulus Package 2.0’
The Confederation of Indian Industry (CII) DG Chandrajit Banerjee said that redefining ‘MSME’ is one major announcement that hasn’t happened since the implementation of the MSME Development Act 2006.
Now, the government changed the MSME definition from a ‘purely investment-based’ one to something that facilitates higher investment and turnover for firms to continue as small businesses and avail incentives.
Banerjee further added that the government’s decision to ‘not’ allow global tenders for government procurement up to Rs 200 crore would make SME sector most self-reliant and a vibrant employment generator.
Even the Associated Chambers of Commerce and Industry (ASSOCHAM) President said the latest government measures would give a due boost to MSMEs, microfinance, housing finance, real estate, and construction companies.
The government’s 100 percent assurance on Rs 3 lakh crore collateral-free loans for a 4-year term along with a one-year moratorium is a significant step towards encouraging MSME growth.
This will contribute to 11 crore jobs and 30 percent of GDP revenues.
FICCI President Sangita Reddy feels that the stage is now set for rebuilding the Indian industry and economy as a whole.
She expressed confidence that the government is at the forefront in driving India out of this crisis and build stronger India.
“We are optimistic that these policies will help get the economy moving again and enable the industry to put millions of Indians back to work safely and minimize the spread of the coronavirus,” says US-India Business Council President Nisha Biswal.
“It is a step in the right direction to spur growth as we look towards making India self-reliant with focus on land, labor, liquidity, and laws,” says Rashmi Saluja, Executive Chairperson, Religare Enterprises.
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