Prepared, Compiled and Distributed by Aniket Ahire

A BRIEF ON THE PRESS CONFERENCE HELD BY THE FINANCE MINISTRY ON 13TH MAY, 2020.

A. ECONOMIC RELIEF PACKAGE FOR MICRO, SMALL, MEDIUM ENTERPRISES (MSME)

❖ Collateral Free Automatic Loans. [Rs. 3 Lakh Crores]

➢ Borrowers with up to Rs. 25 crores outstanding and Rs. 100 crores of

annual turnover shall be eligible to be covered by this scheme.

➢ MSMEs fulfilling the above criteria shall reap the benefit of ‘Collateral Free
Automatic Loan’ from banks and NBFCs, of which the whole shall be
guaranteed by the Government of India. The package amount in
consideration shall be Rs. 3 Lakh Crores.

➢ Credit guarantee by the Government of India shall cover the principal

amount as well as the interest thereof.

➢ Interest on such Collateral Free Automatic Loan shall be capped.

➢ No guarantee or fresh collateral would be required for the purpose.

❖ Subordinate Debt for Stressed MSMEs. [Rs. 20,000 Crores]

➢ In the light of the on-going crisis, MSMEs are liquidity-dry owing to the unutilised
capacities and inability to save their capital from deteriorating. For impactful measures
to be taken, it shall be critical to infuse equity to survive these enterprises.

➢ Government of India shall provide relief to such liquidity-stricken stressed MSMEs by

the way of ‘Subordinate Debt’

➢ Stressed MSMEs and NPA declared MSMEs shall be eligible to pick this relief measure.

➢ The ‘Promoters’ of the aforementioned MSMEs shall be sanctioned debt by banks and
NBFCs. And such promoter shall have to infuse such funds into the MSME in the form of
equity.

➢ The Government of India shall also support the ‘Credit Guarantee Trust for Micro and
Small Enterprises’ (CGTMSE) with a credit infusion of Rs. 4,000 Crores; such funds shall
be utilised by CGTMSE to provide for the guarantee of the ‘Subordinate Debt’ given by
NBFCs and Banks to the promoters of such stressed MSMEs or MSMEs declared as NPAs

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❖ Fund of Funds (FoF) Equity Infusion for Growth-Prospect MSMEs.

[Rs. 50,000 Crores]

➢ The Government of India shall infuse in the form of equity a fund of funds
amounting to Rs. 50,000 Crores.

➢ Growth-prospective MSMEs that show positive potential shall fall under

the ambit of this relief.

➢ Equity shall be infused by the GOI in the aforementioned MSMEs for

expanding their production capacities and aid them a step closer for a
stock-market listing.

➢ Such an FoF will be operated through a Mother Fund and few daughter
funds. Fund structure will help leverage Rs 50,000 Crore of funds at
daughter funds level.

❖ Definition of MSMEs shall be amended hereon.

CLASSIFICATION MICRO SMALL MEDIUM

OF MSME
Investment < Rs. 1 Cr Investment < Rs. 10 Cr Investment < Rs. 20
CRITERIA and and Cr
Turnover < Rs. 5 Cr Turnover < Rs. 50 Cr and
Turnover < Rs. 100 Cr

➢ In order for an entity to fall under the ambit and reliefs of an MSME, Investment
criteria has been revised upwards and an additional criterion of turnover has been
introduced for the said purpose as mentioned in the above table.

➢ There shall no longer be a distinction of criteria between Manufacturing and

Service sector for treatment as an MSME.

➢ Such upward revision of criteria and slashing off the distinction between
manufacturing and service sector has been made in order to take a greater
number of businesses under the umbrella of MSME.

❖ Disallowance of Global Tenders for Govt. Projects.

➢ Due to the imperfect and unjust competition prevailing even at the times of such
humanitarian crisis, Indian MSMEs have faced unprecedented conditions.

➢ In order to create a wide horizon of opportunities for an already declining MSME

Sector, the Government of India has suo motto declared that global tenders of
projects/ procurements/ goods and services to the Government up to Rs. 200
crores shall be disallowed effectively.

➢ This shall lay a foundation for a self-reliant MSME sector and create an
environment of opportunities.

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❖ Market Intermediation and E-market linkage and other reliefs.

➢ Owing to the market limitations of Covid-19, and the disharmonies of the market
forces in the light of failure and refrainment by the market participants to gather
and trade, Government reliefs to intermediate is pertinent.

➢ Government of India shall promote E-market linkage for MSMEs as a

replacement for trade fairs and exhibitions. E-commerce shall be a key factor in
order to recover the lost demand opportunity amidst the crisis for MSMEs

➢ The Government shall constantly monitor and settle dues to payable MSMEs.

➢ MSME receivables due by the Government and Central Public Sector Enterprises
shall be released within 45 days subordinately.

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B. RELIEFS UNDER EMPLOYEE PROVIDENT FUND FOR BUSINESSES AND EMPLOYEES

❖ Treasury to bear EPF Contributions for Employees and Employers under Certain
Conditions. [Rs. 2,500 Crores]

➢ In order to leave the employee, workers, and businesses with

more liquidity, the Government shall bear the Employee
Provident Fund contributions of both – Employee and Employer.

➢ Businesses employing a maximum of 100 employees/ workers,

with at least 90% of such employees/workers earning a wage of
Rs. 15,000 or less shall be eligible to opt for this relief. [Refer
Pradhan Mantri Garib Kalyan Yojana].

➢ Government treasury shall bear the Employee and Employer

contribution for employees earning below Rs. 15,000 per month.

➢ Government treasury shall continue to bear such contribution of

24% of wages (Employee – 12% and Employer - 12%) for the
months of June, July, August 2020.

➢ Nearly 3.6 lakh establishments ought to benefit from this

extension of PMGKY and roughly 72.22 lakh employees shall reap
the benefits of this scheme.

❖ Treasury to bear EPF Contributions for Employees and Employers.

[Rs. 6,750 Crores]

➢ The Government, in its attempt to leave employees and business entities

with excess take-away cash, has slashed the EPF contribution rates from
12% to an amended 10% for both employee as well as employer.

➢ EPF Relief under such scheme shall be available to employees and

employers administrating their businesses in all the aspects, with the
exception of Employer Contribution of PSUs, Government agencies, and
CPSEs.

➢ PSUs, CPSEs, and Government agencies shall continue to contribute 12%

of Employer Provident Fund.

➢ This scheme shall stay in effect for June, July, August 2020.

➢ This scheme shall be applicable to those workers not covered under the
Pradhan Mantri Garib Kalyan Yojana EPF Scheme.

➢ This scheme shall provide liquidity relief to about 6.5 Lakh Business
Establishments and nearabout 4.3 Crore Employees registered under the
EPFO.

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C. ECONOMIC RELIEF PACKAGE FOR NBFCs/ HFCs/MFIs.

❖ Special Liquidity Scheme for NBFCs/ HFCs/ MFIs. [Rs. 30,000 Crores]

➢ Owing to the on-going crisis and the by-product liquidity

crunch, it has become burdensome for Non-Banking
Financial Corporations, Housing Financing Companies,
and Micro Financial Institutions to raise money in the debt
market.

➢ To curb such an unfavourable situation, it is a pressing

necessity for the Government to release a package in
order to infuse certain level of liquidity into and via the
civil financial structure and finance houses.

➢ The Government of India shall buy investment grade ‘Debt

Papers’ which shall not only be restrained to high rating
debt instruments.

➢ The strength of such debt investment by the GOI would be

Rs. 30,000 Crores. The whole of which shall be
guaranteed by the Government of India itself.

❖ Additional Partial Credit Guarantee Scheme for NBFCs. [Rs.

45,000 Crores]

➢ This scheme will help NBFCs, MFIs and HFCs who have low credit
rating. This, in turn, will help MSMEs as more liquidity will be
available to them.

➢ Existing PCGS scheme will be extended to cover borrowings such

as primary issuance of Bonds and Commercial Papers of such
entities.

➢ The Government of India shall honour the scheme as the guarantor

for the investment.

➢ The amount of overall guarantee provided by government would

be till the first loss of up to 20% of the fair value of assets being
purchased.

➢ AA rated paper and below including unrated paper shall be eligible

for investment.

➢ Aggregate liquidity to be infused by the government through

partial credit guarantee shall be Rs. 45,000 Crores.

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D. RELIEF MEASURES FOR POWER DISTRIBUTION COMPANIES

(DISCOMS).

➢ With the current deflation of revenues of the Power Distribution

Companies, and inability to avoid unforeseen cash problems, the
sustainability looks unpredictably negative.

➢ The already piled up payable of DISCOMS towards Power Gen-Cos

approximately sum up to a massive Rs.94,000 Crores.

➢ Power Finance Corporation (PFC) and Rural Electrification

Corporation shall infuse liquidity for up to Rs. 90,000 Crores to
such DISCOMS.

➢ Loans to be given against State guarantees for exclusive purpose of

discharging liabilities of DISCOMS to Power Generation
Companies.

➢ Central Public Sector Generation Companies shall give rebate to

DISCOMS which shall be passed on to the final consumers
(industries).

E. CONCESSIONS TO CONTRATCORS ENGAGED IN GOVERNMENT PROJECTS.

➢ All Contractors providing services to Central Government

agencies, Central Government Bodies, Railways, etc. shall
be given a suo motto Extension period of up to 6 Months
without any extra costs.

➢ Works covered under this scheme covers construction/ and

goods and services contracts, covers obligations like
completion of work, intermediate milestones etc. and
extension of Concession period in PPP contracts.

➢ To facilitate greater liquidity, government agencies will

partially release bank guarantees to the extent of the
completed contract so that cash flow improves.

F. RELIEF TO REAL ESTATE SECTOR.

➢ Due to the consequential lockdown driven by the mass outbreak of

COVID-19, it is but a pertinent fact that Real Estate developers may
default on their RERA Completion timelines.

➢ Hence, as a counter reaction, Ministry of Urban Development and

Housing shall advice the states and union territories to extend the
registration and completion date suo motto by 6 months for all
projects expiring on or after 25th March, 2020 without individual

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applications. Additional 3 months may be extended by the

regulatory authorities.

➢ Mandates the states and the regulatory bodies to issue fresh

‘Project Registration Certificates’ automatically with revised
timelines.

➢ This shall be an undeniable measure to de-stress the real estate

players amidst the economic irregularities.

G. INCOME TAX STATUTE MEASURES AS A RELIEF.

➢ Effective from 14th May, 2020 up to 31st March 2021, TDS

rates on Non-salaried payments to residents and TCS for
specified receipts shall be slashed off by 1/4th. This shall
be applicable on Payments to Contractors, Professional
Fees, Dividends, Interest, Rent, Royalty, Commission,
Brokerage.

➢ All pending Income Tax refunds to charitable trusts and

non-corporate firms, professions, partnerships, LLPs
Individuals, etc. shall be issued immediately with effect.

➢ Due date of all Income-Tax return for F.Y. 2019-20 will

be extended from 31st July, 2020 & 31st October, 2020
to 30th November, 2020 and Tax audit from 30th
September, 2020 to 31st October,2020.

➢ Date of Assessment getting barred as on 30th September

2020 shall be extended to 31st December, 2020. And
those Assessment getting barred as on 31st March 2021,
shall be extended to 30th September 2021.

➢ Without any additional amount to be paid, the period for

Vivad se Vishwas Scheme to be extended to 31st
December, 2020.

Thank You!
Disclaimer: - The aforementioned facts are taken from the excerpts of the press briefing held on
13th May, 2020 by the Finance Ministry. In any case, this text does not amount to any form of
opinion or economic suggestion made by the author of data.

For any queries, please feel free to get in touch.

Aniket Ahire (+91 8108675216)

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