20 Lakh Crore Package

To improve the nation’s economy and to make the nation self- reliant, Rs. 20 lakh crore economic package was announced by the Prime Minister, Narendra Modi in his fifth address to the nation.It will act as a significant link for the ‘AatmaNirbhar Bharat Abhiyan’. In addition, the complete package is about 10% of India’s GDP. This economic package includes the previously announced measures in the wake of coronavirus.

The package’s focus is going on Land, Labour, Liquidity and Laws. In addition, the package has been introduced for the nation’s cottage industry, labour force, farmers, honest tax payers, Micro, Small and Medium Enterprises. The announcements in relation to the INR 20 lakh crore economic package will be made in tranches.[1]

The set of measures mentioned here in after, were announced by the Finance minister, Nirmala Sitharaman along with Mos Anurag Thakur and finance ministry officials. Key Highlights of the first three tranches are given below.

FIRST TRANCHE[2]

On May 13, Finance Minister, Nirmala Sitharaman unveiled the details of the first set of relief measures. The first tranche contains 15 different measures for MSMEs, EPF, NBFCs and MFIs, DISCOMs, contractors, real estate sector, and tax measures. The 15 different measures are as follows:

Rs 1.70 lakh crore relief package under Pradhan Mantri Garib Kalyan
·        
  •  Insurance cover worth Rs 50 lakh per health worker
  •  Eighty crore people have the option to benefit from free supply of wheat or rice, pulses for the period of next three months.
  • 20 crore women Jan Dhan account holders to get an amount of Rs. 500 per month for the period of next three months.
  • Gas cylinders free of charge will be given to 8 crore poor families for the period of next three months.
  • Increase in MNREGA wage that will benefit 13.62 crore families.
  • Ex-Gratia of an amount of Rs. 1000 to 3 crore poor senior citizens, poor Divyang and poor widows.

Measures taken by Reserves Bank of India
·         
  •  Reduction in Cash Reserve Ratio (CRR) lead to enhancement of liquidity of Rs. 1.37 lakh crore.
  • Targeted Long Term Repo Operations (TTLROs) of Rs. 1 lakh crore and TLTRO of Rs. 50,000 crore for certain purposes.
  • Rise in banks limit for borrowing overnight, under the marginal standing facility, permitting the banking system to get an additional Rs 1,37,000 crore of liquidity at the decreased MSF rate.

MSMEs
·        
  •  Revision of the Definition of MSMEs
  • For Businesses including MSMEs, there has been an announcement of Rs 3 lakh crore collateral free automatic loan.
  • Loans- Four year tenor and a moratorium of a period of 12 months on principle payments as well as a cap on interest costs.
  • 100% credit guarantee cover to be provided .
  • Issue of Emergency credit lines by banks and NBFCs to MSMEs up to 20 percent of their complete outstanding credit as on Feb 2, 2020.
  •  Liquidity support of up to Rs 20,000 crore by way of subordinate debt for stressed MSMEs.
  • Funds of up to an amount of Rs 50,000 crore for the purpose of equity support to MSMEs with the potential of growth.
  • There will be no global tenders for upto 200 crore. The global tenders will not be allowed in government procurement tenders up to Rs 200 crore.

Government’s EPFO relief
·        
  •  Liquidity relief to be provided to EPF companies.
  • Government support stretched to a period of three months i.e. till August 2020.
  • Liquidity relief of 2,500 crores will be provided.

More Take-Home Salaries and Increase Cash In Hand for Employers[3]
·        
  •  The Government will take up PF for firms with 100 staff, making less than Rs 15,000.
  • Reduction in statutory PF contribution from 12% to 10%.
  • For State PSUs, the government will carry on to pay 12% , whereas the govt. staff will pay 10%.
Special Liquidity Scheme for NBFCs
·          
  • Rs 30,000 crore special liquidity scheme has been launched by the Government for NBFCs/ HFCs/ MFIs.

Partial Credit Guarantee Scheme 2.0 for NBFCs
·        
  •  Rs 45,000 crore liquidity infusion by way of partial credit guarantee scheme 2.0 for NBFCs.

Liquidity injection into DISCOMs
·       
  •   90,000 crore liquidity to be injected into DISCOMs.

Relief to Contractors
·        
  •  Extension of up to 6 months to be providedfor construction purposes and goods and service contracts by all the central agencies

Real Estate Sector
·        
  •  Real Estate Developers are permitted to invoke ‘force majeure clause’
  • Suo-moto extension of registration and completion by six months for all the registered projects expiring on or after 25th March, 2020 without individual applications.

Tax Relief
  •  Reduction of TDS/TCS rate by 25 % till March 31, 2020 resulting in the benefit of Rs 50,000 crore for taxpayers.
  •  Extension of the due date of all income-tax returns for the Financial Year 2019-20 (FY 2019-20) from 31st July, 2020 and 31st October, 2020 to 30th November, 2020. For Tax audit, from 30th September, 2020 to 31st October, 2020.
  • Pending refunds to partnership, charitable trusts, non-corporate businesses and professions including proprietorship, LLP and co-operatives will be provided instantly.

SECOND TRANCHE[4][5]

The second tranche was focused at migrant workers, street vendors, small farmers and affordable housing.

There was a mention of the measures for migrant workers and farmers that were introduced by the Government after coronavirus outbreak. In the Post- Covid time, the relief for farmers and migrants workers, chiefly included loans at concessional rates, extensions, work being made available by way of MGNREGS augmentation of the SDRF funds in order to help states to establish shelters for migrants and supply food to them.

Nine steps were announced under the second tranche for migrant workers, street vendors, MUDRA shisha Loan, street vendors, housing, employment generation for tribals and for small farmers. 

The nine steps announced in the second tranche are as follows:

1.      Free food for Migrants
Migrants who do not have NFSA or state cards to be given certain amount of free channa, wheat / rice for next two months. It will require Rs 3,500 crore and it will probably help around 8 crore migrants.

2.      One Nation, One Ration Card
Public Distribution Scheme (PDS) ration cards are to be made portable. A ration card holder will be able to purchase subsidized foodgrains rom any Fair price Shop across the country. There will be 100 % coverage under ‘One Nation One Ration Card’ by March 31, 2021.

3.      Affordable Rental Accomodation
This scheme is under the ‘PM Awas Yojana’, which involves providing incentives to private manufacturing units as well as industrial units to develop affordable housing, In addition, turning govt. funded houses into affordable renting accomodations for migrant workers. State Government agencies will also be provided with incentives in order to develop affordable housing.

4.      MUDRA Shishu Loan
An interest subvention of 2% for the next 12 months for those who have availed loans up to Rs 50,000 subsequent to the moratorium period extended by RBI ends. Nearly three crore people will get the benefit worth Rs 1500 crore.

5.      Street Vendor
A special scheme has been launched for street vendors. They will be able to avail a loan of Rs 10,000 from the Rs 5,000 crore loan facility.

6.      Affordable Housing
Extension till March 2021 of Credit-Linked Scheme for middle income households in the income group Rs 6- 18 lakh. It will result in investments of Rs 70,000 crore in housing and will stimulate sectors like steel, cement and generate jobs.

7.      Tribals
Under CAMPA funds, 6 crore worth proposals have originated from states. Employment will be provided to tribal people in wildlife protection/ management, forest management and other forest related activities.

Small/ Marginal Farmers
8.      The Government will provide 30,000 crore additional capital emergency funds by way of NABARD. There will be immediate release of these funds for post-rabi harvest and activities in connection with making kharif ready.

9.      In order to boost farming activities, Rs 2 lakh crore of concessional credit will be provided, under the PM Kisan Credit Card. It will be extended to 2.5 crore farmers. Animal husbandry and fisheries will also be a part of this.

THIRD TRANCHE[6][7]

The third tranche is regarding farmers, food processing and allied activities. Eleven measures related to strengthening infrastructure, governance and administrative reforms were announced.

In the last two months, in order to provide relief to agriculture and dairy sector, the Government took steps as follows:

  • Purchases worth Rs 74,300 crore based on MSP took place in the course of lockdown.
  • Rs 18,700 crore were transferred to farmers under PM Kisan.
  • Rs 6,000 crore claims got processed under FasalBima Yojana.
  • The government had also taken few steps to provide relief to the Animal Husbandry sector. One of the steps involved the transfer of Rs 5,000 crore additional liquidity to dairy farmers.
Eleven Measures

Upgrading Infrastructure
 
  1.  One lakh crore fund has been assigned to strengthen the farm gate infrastructure.
  2. 10,000 crore for the purpose of formalisation of micro-food enterprises and cluster based farming approach to be followed.
  3. PM MatsyaSampada Yojana will be launched by the government for development of marine and inland fisheries and Rs 20,000 crore have been assigned under this scheme. The money will be spent to fill the spaces in value chains. It is expected to result in additional fish production of 70 lakh tonnes in the next five years and give employment to nearly 55 lakh people.
  4. Rs 13,343 crore for the purpose of vaccination of livestock in India.
  5. Rs 15,000 crore have been allocated for ramping up the dairy infrastructure. In addition, investments to be made in cattle feed.
  6. Allocation of Rs 4,000 crore to promote herbal cultivation. For growing medicinal and herbal plants, ten lakh hectares of land will be used and it will furnish income of about Rs 5,000 crore for farmers.
  7. Allocation of Rs 500 crore for beekeeping which will be of help to around 2 lakh beekepers.
  8. Rs 500 crore for Operation Greens. It will be extended beyond potatoes, tomatoes, onions  and will be pertinent to all vegetables.
Governance reforms
9.      Propose amendment to Essential Commodities Act, 1955, so as to enable better price realization for farmers and stock limits to be imposed only under rare situations such as surge in prices, famine etc.

Agricultural Marketing Reforms

10.  Formulation of a central law to furnish sufficient options to sell attractively-priced produce, barrier free inter-state trade and to issue framework for e-trading of agriculture produce.

Agriculture produce Price and Quality Assurance

11.  Facilitative legal framework to be developed to enable farmers for dealing in a fair way with aggregators, processors, large retailers, exporters etc. Quality standardization, risk mitigation for farmers and assured returns shall make integral part of the framework.

Originally posted on www.kpalegal.com on 21st May 2020

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