All you know about Economic Relief Package 'Aatmanirbhar Bharat Abhiyan'- Part-1

By Stuti Mishra|Updated : May 14th, 2020

Union Finance Minister Nirmala Sitharaman has announced the details of the Economic Relief Package for “Aatmanirbhar Bharat Abhiyan” in fight against COVID-19 pandemic. This economic package of Rs 20 lakh crore equivalent to 10% of India’s GDP has been announced by Prime Minister Narendra Modi in his speech recently with the prime objective of making India self-reliant.

The call for Aatmanirbhar Bharat stands on five pillars:

  • Economy
  • Infrastructure
  • System
  • Vibrant Demography
  • Demand

Smt. Nirmala Sitharaman announced measures that focuses on Getting back to work enabling employees and employers, businesses, especially Micro Small and Medium Enterprises to get back to production and workers back to gainful employment. The measures also included efforts to strengthen NBFCs, HFCs, Micro Finance Sector and Power Sector. Other than this, there is tax relief to business, relief from contractual commitments to contractors in public procurement and compliance relief to real estate sector under the new package.

Here are all the details of the measures announced by Finance Minister

Economic Relief Package for “Aatmanirbhar Bharat Abhiyan”

The package for self-reliant India or Aatmanirbhar Bharat in Part 1 includes a total of 15 measures to cater to various sections including MSMEs, DISCOMS, EPF, real estate, among others. They are listed below: 


1. Collateral-free Automatic Loans

  • Under this, Rs 3 lakh crore collateral-free automatic loan for Businesses including MSMEs will be provided till 31st of October 2020.
  • Emergency Credit Line from Banks and NBFCs up to 20% of entire outstanding credit in the form of a Term Loan at a concessional rate will be provided as additional working capital to MSMEs.
  • Borrowers with Rs. 100 crore turnovers are eligible.
  • Loans to have 4-year tenor with moratorium of 12 months on Principal with capped interest.
  • No guarantee fee and no fresh collateral will be needed.
  • The amount will be on 100% guaranteed by Government to more than 45 lakh MSMEs.

2. Subordinate Debt for Stressed category MSMEs

  • The subordinate debt of Rs. 20,000 crore will be made available for about 2 lakh MSMEs that are in NPA or stressed category.
  • It will provide support of Rs. 4,000 Crore to Credit Guarantee Trust for Micro and Small enterprises. 
  • MSMEs Promoters will be given debt by banks of 15% of their existing stake in the unit subject to a maximum of Rs 75 lakhs.

3. Equity infusion through Fund of Funds

  • Govt will set up a Fund of Funds (FoF) of Rs 10,000 crore providing equity funding support for MSMEs with growth potential and viability.
  • FoF shall be operated through Mother and a few Daughter funds with leverage of 1:4.
  • It will be able to mobilise equity of about Rs 50,000 crores.
  • It will not only help to expand MSMEs size but will also enhance the capacity of MSMEs.

4. New definition of MSME

  • New Definition of MSME has been developed by raising the Investment limit.
  • An additional criterion of turnover is also being introduced.
  • Investment limit will be revised upwards with new amendments.
  • The new categorization for MSMEs are as follows:
  1. For Microenterprise: Investment of upto Rs 1 crore and turnover of upto Rs 5 crore.
  2. For Small enterprise: Investment of upto Rs 10 crore and turnover of upto Rs 50 crore.
  3. For Medium enterprise: Investment of upto Rs 20 crore and turnover of upto Rs 100 crore.

5. No Global tenders for Government tenders of up to Rs 200 crores.

  • Government's General Financial Rules (GFR) will be amended to disallow global tender enquiries in the appropriation of Goods and Services of not more than Rs 200 crores value.
  • Necessary amendments of General Financial Rules will be effected support Make in India and help MSMEs to increase their business.

6. Other Measures for MSME

  • MEMEs will be promoted with e-market linkage to act as a replacement for trade fairs and exhibitions.
  • MSME due amount will be released in 45 days.
  • Fintech (Financial Technology) will be used to enhance transaction lending using the data generated by e-marketplace.

 For EPF

7. EPF Contribution for employer and employee

  • The new scheme introduced under PMGKP thorugh which Government has to contribute 12% salary of both employer and employee to EPF will be extended by another 3 months (June, July, and August 2020).
  • It will provide benefit of about Rs 2500 crores to 72.22 lakh employees.

8. EPF contribution reduced for Business & Workers

  • Statutory PF contribution of both employer and employee will be reduced to 10% from existing 12% for next 3 months.
  • However, CPSEs and State PSUs have to contribute 12% as employer contribution.
  • This scheme will be applicable for workers who have 24% EPF support
  • This will give relief to 6.5 lakh establishments covered under EPFO providing liquidity of Rs 6750 Crore


9. Special Liquidity Scheme for NBFC/HFC/MFIs

  • The government will launch Rs 30,000 crore Special Liquidity Scheme supplementing RBI measures of augmenting liquidity.
  • This will be 100% guaranteed by the Government of India.
  • This scheme will cover both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs.

10Partial credit guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs

  • Existing Partial Credit Guarantee scheme is being revamped to cover the borrowings of lower rated NBFCs, HFCs and other Micro Finance Institutions (MFIs).
  • Government of India will provide 20% first loss sovereign guarantee to Public Sector Banks.
  • This scheme will infuse liquidity of Rs 45,000 crores

 Power Sector

11. Liquidity Injection for DISCOMs

  • Power Finance Corporation and Rural Electrification Corporation will infuse liquidity of Rs 90000 crores in the DISCOMS.
  • This will be used by DISCOMS to pay their dues to Transmission and Generation companies.
  • Further, CPSE GENCOs will have to give a rebate to DISCOMS on the condition that the rebate is passed to the final consumers as a relief towards their fixed charges.


12. Relief to Contractors

  • All central agencies like Railways, Ministry of Road Transport and Highways and CPWD will be given extension of up to 6 months for completion of contractual obligations.
  • Government agencies to partially release bank guarantees, to the extent contracts are partially completed, to ease cash flows

Real Estate 

13. Relief to Real Estate Projects

  • State Governments are being advised to invoke the Force Majeure clause under RERA (Real Estate Regulatory Authority).
  • The registration and completion date for all registered projects will be extended for 6 months.
  • Regulatory Authorities may extend this period for upto 3 months as per the requirement.
  • Issue fresh ‘Project Registration Certificates’ automatically with revised timelines.
  • These measures will lessen the burden over real estate developers and ensure completion of projects so that homebuyers are able to get their booked houses with new timelines.

 For Tax

14. Tax Relief to Business

  • The pending income tax refunds shall be issued immediately to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives.

15. Tax-related measures

  • Rates Tax Deducted at Source (TDS) will be reduced by 25% for the remaining period of FY 20-21.
  • The reduction will be applicable for all non-salaried payment to residents, and tax collected at source rate.
  • This will provide liquidity of Rs 50,000 Crore.
  • The due date for all Income Tax Returns of the Assessment Year 2020-21 will be extended to 30 November 2020.
  • Tax audit due date will also be extended to 31 October 2020.
  • Vivad se Vishwas Scheme period for making payment without additional amount will be extended to 31st December 2020.

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