How India’s economy will revive with the announcement of 20 lakh crore?

With a view to reviving economy amidst a series of lockdowns, PM Modi has announced a special 20 lakh crore economic relief package under Atma Nirbhar Bharat Abhiyan or Self-reliant India movement. In the first installment of this package Finance Minister Nirmala Sitharaman has announced collateral-free automatic free loans for businesses, MSMEs, Banking, real estate, and power distribution companies. 

Some Key Points of the Special economic stimulus measures are :

Emergency Credit Support through NABARD 

The government announced  Rs 30,000 crore additional emergency credit support through NABARD for farmers. This will prove beneficial for around 3 crore farmers.  Moreover, the Centre will provide Rs 2 lakh crore of concessional credit through Kisan Credit Cards to about 2.5 crore farmers. The special drive will be undertaken for PM-Kisan beneficiaries, fishermen, and animal husbandry farmers. 

MSMEs Definition Changed 

The government has changed the definition of MSME. Now, Both investment and turnover are used to define MSMEs. Under the new definition, a firm with turn over of Rs 5 crore is to be called a micro-unit, of Rs 50 crore will be called as a small unit and turn over greater than Rs 100 core is to be called as Medium unit. Previously, an enterprise with an investment up to Rs 25 lakh was called a micro-unit. 

Collateral free loans to MSMEs

Collateral free loans of 3 lakh will be provided to boost the MSME sector with a moratorium period of 12 months. These loans will benefit 45 lakh small and medium units.

Measures for MSMEs through guarantees, equity infusion, and debt support will incentivize bank lending to MSMEs as well as provide critical support to stresses entities in the current situation.

For NBFCs

Special liquidity scheme for NBFC, Housing Finance Companies, and Micro Finance institutions has been announced for worth Rs30000 crore.  Lower rated NBFCs will receive special liquidity support which means that the bank does not have to take credit risk

Employee Provident Fund support

Under the Pradhan Mantri Gramin Kaushal Yojana (PMGKY) scheme, the  Employee Provident Fund support provided to low income organized workers has been extended for another three months. Mandatory EPF contributions are also being reduced from 12% to 10%. Deadlines for income tax returns has been extended

Apart from that, The rates of tax deduction at source (TDS) and tax collection at source (TCS) have been cut by 25% for the next year

Free Foodgrains and Job Creation

Free Food will be provided to the migrants for the next 2 months.  Through the implementation of One Nation, one Card system which provides national portability of these public distribution cards will be implemented

For the creation of job opportunities in urban, semi-urban, and rural areas Rs 6,000 crore compensatory afforestation management and planning authority (CAMPA) funds will be set up under Compensatory Afforestation Fund, Act 2016. 

Interest Subvention Support

Interest subvention support of 2% for those who have availed loans under Mudra Shishu loan will be provided after 3 month moratorium period. It will benefit over 3 crore people under the Shishu category. 

More announcements of the economic stimulus package will be announced in subsequent days.