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Major Steps Taken By The Finance Ministry For Revival of MSMEs

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On Tuesday 13th May 2020 finance minister Nirmala Sitharaman said that the Aatmanirbhar Bharat rests on five pillars: Economy, Infrastructure, Technology-driven systems, Demography, and Demand. The focus will be on factors of production: Land, Labour, liquidity, and Laws. “The intention behind this is to make local brands global.”

This thought and implementation is in favor of all MSMEs. They have a chance and a big platform to revitalize and grow their businesses.

Here are some key takeaways from the announcement by finance minister:

Nine major steps for the revival of the MSME sector:

  1. Collateral free loan of Rs 3 lakh crores for MSMEs. This will benefit 45 lakh units so that they can resume work, Grow and save jobs.
  2. For stressed MSMEs, the Subordinate debt provision of Rs 20,000 cr has been announced for 2 lakh MSMEs. It will benefit those who are NPAs or stressed MSMEs.
  3. Rs 50,000 crore equity infusion through a Mother fund and Daughter funds framework for MSMEs that are viable but need hand-holding. A fund of funds with a corpus of Rs 10,000 crore will be set up to help these units expand capacity and help them list on Markets if they choose.
  4. The definition of MSMEs has been revised to allow them to aim for expansion and not lose benefits. Also, there’ll be no distinction between the manufacturing & services sector MSMEs.

    New definitions:
    Micro units: Investment upto Rs 1 crore & turnover of less than Rs 5 crore. Small units Investment upto Rs 10 crore & turnover of less than Rs 50 crore. Medium units with investment up to Rs 20 crore & turnover of less than Rs 100 crore.

  5. Global tenders will be disallowed up to Rs 200 crore for government contracts.
  6. Ministry will ensure e-market linkages are provided across the board in the absence of non-participation in trade fairs due to COVID. Govt of India and PSUs will clear all the receivables in the next 45 days.
  7. A reduction of 25% of existing rates of Tax Deducted at Source (TDS) & Tax Collection at Sources (TCS) from tomorrow till March 31, 2021. This will release Rs 50,000 crores.
  8. Due date of all IT Return filings extended from July 31 to November 30.
    – “Vivaad se Vishwas scheme” extended till December 31, 2020.
    – Date of assessments getting barred as on Sep 30, 2020, extended to December 31, 2020.
    – Date of assessments getting barred as on March 31, 2021, extended to September 30, 2021.
  9. Rs 30,000 crore special liquidity scheme for investing in investment-grade debt paper of NBFCs, HFCs and MFIs. These NBFCs are those that are also funding MSMEs. These will be fully guaranteed by the government of India.

Important: The government is ensuring that present coronavirus pandemic is prevented from making a serious dent on the Indian economy. It wants that investments should not be stopped and banks should ensure that all eligible borrowers get sufficient funds.


 

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