The first tranche of measures announced by Finance Minister Nirmala Sitharaman as part of the Rs 20 lakh crore economic package by the Prime Minister Narendra Modi, would provide immediate and the much-needed relief to the MSMEs, micro finance institutions, housing finance companies, stressed real estate and construction sectors to mitigate the enormous impact of the nation-wide lockdown due to Covid-19 pandemic, said ASSOCHAM secretary general Deepak Sood.
Sood said assuring 100 per cent government guarantee on Rs 3 lakh crore collateral -free loans to the MSMEs for a four-year term and one-year moratorium is a major step towards reviving the MSME sector which creates 11 crore jobs and accounts for 30 per cent of the country’s GDP.
“The Rs 3 lakh crore collateral free loans for the MSMEs on guarantee from the government would have a big time multiplier impact and would generate economic activity of at least up to Rs 10 lakh crore, not only retaining the jobs but also creating additional employment,” he said.
Sood said it is clear from the first tranche of measures that the mega package announced by the Prime Minister yesterday would be all-encompassing, going well beyond the fiscal stimulus.
The reforms are clearly aimed at the ‘Atma Nirbhar Bharat Abhiyaan’ (Self-Reliant India), he said.
The upward revision of investment limit in the definition of MSMEs, along with the additional criteria of turnover, is an example of the government responding well to the emergent situation, ASSOCHAM secretary general said.
Distinction between manufacturing and services MSMEs was undesireable and has rightly been removed. Disallowing global tenders up to Rs 200 crore in procurement of government orders is another important move towards self-reliance by giving a much-needed level playing to the MSMEs which were being left out in the exclusive and not inclusive system of tendering, he said.
Sood said, treating Covid-19 as an ‘act of God’ and allowing the real estate developers extra six months for completion of projects would help both the developers and the consumers as it would make the sector viable.
Rs 30,000 crore liquidity infusion into the NBFCs, HFCs and MFIs through fully and partial credit guarantee even for debt outside the AAA category, but with investment grade, would eventually help the MSMEs as well.
Sood listed reduction in the TDS by 25 percentage points as a demand-boosting measure along with cut in the EPFO deductions from 12 to 10 per cent. Further extension of compliance dates for different tax provisions would relieve the tax-payers of the regulatory stress. The relief to the government contractors should help them cope up with the difficult situation better.
He said, the ASSOCHAM is confident that once all the components of Rs 20 lakh crore package are announced, the business confidence would be improving significantly enabling the industry and trade face the global pandemic with minimum of damage.