BREAKING IT DOWN
THE TARGETED RELIEF MEASURES ANNOUNCED BY FINANCE MINISTER NIRMALA SITHARAMAN ON 13-14 MAY
SMALL BUSINESSES
Measure: Rs 3 lakh crore collateral-free loans for MSMEs, 100% credit guaranteed Impact: Moratorium on payments and government loan guarantee to benefit 4.5 million units
Measure: Rs 20,000 crore subordinated debt for stressed MSMEs
Impact: To benefit 200,000 MSMEs, including those with loans classified as stressed or as nonperforming assets
Measure: Rs 50,000 crore equity infusion for MSMEs through a fund of funds Impact: Will help MSMEs tide over severe capital shortage
Measure: Reclassification of MSMEs (service & manufacturing) Micro: investment Impact: Growth push; old incentive structure favoured smaller units Measure: No global firms can bid for government tenders Impact: More contracts for domestic firms Measure: Government and central PSEs to pay all MSME dues—about Rs 5 lakh cr—within 45 days Impact: Improved cash flows and balance sheets for MSMEs NBFCs Measure: Rs 30,000 crore special liquidity scheme for NBFCs, housing finance companies and microfinance institutions; investment will be made in both primary and secondary market transactions to buy debt paper of these institutions. A Rs 45,000 crore partial credit guarantee scheme for NBFCs also launched Impact: Enables these institutions to borrow more from the market, with no direct impact on the government’s fiscal deficit, being only a guarantee POWER DISCOMS Measure: A Rs 90,000 crore emergency liquidity infusion in power distribution companies Impact” Discoms can use these funds to pay power generation and transmission companies REAL ESTATE DEVELOPERS Measure: Under the Real Estate Regulatory Act, the COVID-19 crisis will be treated as a ‘force majeure’ event; timelines for statutory compliances extended Impact: Relief for developers LIQUIDITY VIA EPF Measure: Employees’ Provident Fund (EPF) contribution support for firms extended till August. EPF contributions to be reduced from 12% to 10% for 3 months Impact: Will free up about Rs 2,500 crore and benefit 7.2 million employees; extra liquidity for employers of about Rs 6,750 crore over three months