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First Portion of India’s Massive Rs 20 lakh Crore Economic Package: Key Points

Updated: May 24

Finance minister Nirmala Sitharaman on Wednesday unveiled the details of the mega economic stimulus package. This Rs 20 lakh crore package includes the previous Rs 1.7 lakh crore stimulus announced by the Finance Minister and steps taken by the RBI. Aimed at all sections of the society, including the middle-class, SMEs, laborers, farmers, and the industry, the economic package is themed around the 'Self-reliant India campaign'.


Today's tranche included the measures as follows: 6 are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 for discoms, 1 for contractors, 1 for real estate sector, and 3 tax measures.


Here are the key points of Today's tranche -


  • ₹3 lakh crores collateral-free automatic loans for businesses, particularly MSMEs.

  • Collateral free loan to be provided to SMEs with 12-month moratorium; These loans will be available till October 31, 2020, and will be 100 percent credit guaranteed. This will help 45 lakh units to resume activity and safeguard jobs.

  • For stressed MSMEs, the Government to facilitate the provision of ₹20,000 crores subordinated debt for equity support. 2 lakh MSMEs likely to benefit.

  • For MSMEs who may be doing viable business but need handholding because of the current situation, the govt announces ₹50,000 crore equity infusion via 'fund of funds'. This will be operated through 'mother fund' and a few 'daughter funds'.

  • The investment limit which defined an MSME has been revised upwards to Rs 1 crore as compared to Rs 25 lakh earlier.

  • Global tenders will be disallowed in government procurement for tenders up to Rs 200 crore.

  • Within the next 45 days, all MSME receivables will be cleared by CPSEs and the government of India.

  • With effect from May 14 till March 31, 2021, TDS/TCS (tax deducted at source/tax collected at source) has been reduced by 25% of the existing rate and is applicable to all payments. It will release Rs 50,000 crore in the hands of the people instead of paying them as taxes.

  • Due date of all income-tax return for FY 2019-20 will be extended from July 31, 2020, & October 31, 2020, to November 30, 2020, and Tax audit from September 30, 2020, to October 31, 2020.

  • EPF support for business and workers has been extended for the next 3 months, providing liquidity relief of Rs 2,500 crore. Statutory PF contribution is being reduced to 10 percent from 12 percent.


  • Special liquidity scheme of Rs 30,000 crore for NBFCs/HFCs/MFIs has been launched.

  • One time liquidity infusion of Rs 90,000 crore has been made for all power distribution companies. This will be against receivables and will enable Discoms to pay generation companies.

  • The government announces Rs 45,000 crore liquidity infusion through a Partial Credit Guarantee Scheme 2.0 for NBFCs.

  • All Central agencies to provide an extension of up to 6 months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts.

  • Ministry of housing and urban affairs will issue advisory to states and UTs enabling invocation of force majeure / Act of God measure during COVID-19 period, for all registered real estate projects expiring on or after March 25, 2020.

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