Economic Relief Package announced for “Aatmanirbhar Bharat Abhiyan” - VISION

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Wednesday, May 13, 2020

Economic Relief Package announced for “Aatmanirbhar Bharat Abhiyan”

Union Finance Minister Nirmala Sitharaman has announced the details of the Economic Relief Package for “Aatmanirbhar Bharat Abhiyan” amid COVID-19 pandemic. This economic package of Rs 20 lakh crore has been announced with the prime objective of making India self-reliant.

During her address, the minister mentioned different reforms implemented till now by the Government of India. These reforms includes Direct Benefit Transfer; Jan Dhan, Aadhaar, Mobile (JAM); Pradhan Mantri Awas Yojana, Pradhan Mantri Ujjwala Yojana, Microfinance schemes, Swachh Bharat Mission, Ayushman Bharat Yojana etc.

During her address, she mentioned that the present tranche comprises of 15 different measures according to the given composition: six for MSMEs, two for Employee provident funds, two for NBFCs, two for MFIs, one for discoms, one for real estate, three are tax related while the remaining one for contractors.

Highlights of measures announced as part of Economic Relief Package for “Aatmanirbhar Bharat Abhiyan”:

For Standard MSMEs:

•Rs 3 lakh crore collateral-free automatic loan for Businesses including MSMEs. This scheme can be availed till 31st Oct, 2020.
•Loans facility would be available for those firms with Rs 25 crore outstanding loans and annual turnover of Rs 100 crores.
•This loan facility would be having a tenor of 4 years along with moratorium of 12 months.
•100% credit guarantee would be provided to banks and NBFCs on principal as well as interest.
•There will be no guarantee fees as well as no fresh collateral required.
These reforms are expected to benefit 45 lakh business units in order to resume their business activities and safeguard jobs.
For stressed MSMEs:
•GoI has announced a Subordinated Debt of Rs 20000 crores which is expected to benefit about 2 lakh MSMEs.
•The functioning of MSMEs which are NPA or are stressed would be eligible to avail this facility.
•GoI has announced to provide Rs 4000 crore as its contribution to Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTSME).
•The CGTSME will provide partial credit guarantee support to Banks in order to benefit the stressed MSMEs.
•The promoters of the MSME will be given debt by banks, which would be infused by the promoter as equity in the unit.

For MSME having potential and which are viable:

•A fund of fund has been created to infuse equity of worth Rs 50,000 crore in the MSME.
•Fund of Fund with corpus of Rs 10,000 crores would be set up to provide equity funding to MSMEs with growth potential and viability.
•This FoF would be operated via a mother fund including some daughter funds.
•FoF is expected to benefit MSMEs by expanding size along with their capacity.
•It will also encourage MSMEs to get listed on main board of Stock Exchanges.