Late evening on Tuesday, the prime minister of India, Narendra Modi announced a INR 20 Lakh crore ($266 billion) stimulus package to battle the socio-economic impact of the Corona virus.
Apparently, this amount constitutes 10% of our country's GDP, one of the largest bail-out packages handed in recent times to revive economic activity in the world's largest democracy.
"Scientists say that coronavirus will remain a part of our lives for a long time, but our lives cannot revolve around it. We will wear masks, maintain social distancing but we will not lose sight of our goals," Modi said on Tuesday.
Giving more details about the package, Union Finance Minister, Nirmala Sitharaman held a press conference on Wednesday announcing certain relief measures. Here are some of the relevant highlights:
- 2 lakh Micro, Small and Medium Enterprises (MSMEs) which are stressed will be provided with equity support and INR 20,000 crores as subordinate debt.
- A collateral free MSME loan facility of INR 3 lakh crores with a tenure of 4 years and valid up to October 31st, 2020 has been setup.
- For government procurement up to INR 200 crores, all global tenders will be disallowed to allow space for Indian companies to participate without unfair competition.
- Tax deducted at Source (TDS) for non-salaried specified payments made to resident Indians and Tax collected at Source (TCS) for specified receipts shall be reduced by 25% of existing rates.
- Employees' Provident Fund (EPF) contributions of both employee and employer has been lowered to 10% for the following 3 months from a previous 12%.
- Due-dates for all income tax returns for FY 2019-2020 will be extended from July 31st and October 31st to November 30th, 2020.
- To promote liquidity for Non-banking Financial Institutions (NBFCs), housing finance companies (HFCs) and microfinance institutions (MFIs), a special package of INR 30,000 crores was announced.
"Essentially this is to spurt growth and build a very self reliant India and that is why this whole initiative is called Atmanirbhar Bharat Abhiyan. This does not mean India is to be an isolationist country," said the Finance Minister.
More reforms will be announced in the following weeks aiming at reviving a battered economic system over the past several weeks.