NEW DELHI, May 13 (Xinhua) -- India's Finance Minister Nirmala Sitharaman on Wednesday announced the centre government's first tranche of the 20 lakh crore Indian Rupees (267 billion US dollars) economic package by Prime Minister Narendra Modi on Tuesday.
India's Finance Minister Nirmala Sitharaman speaks during a news conference in New Delhi on May 13, 2020. Photo by AFP
"Today's announcements will be regarding micro, small and medium enterprises (MSMEs), Employee Provident Funds, non-banking financial companies (NBFCs), housing finance companies (HFCs), micro finance institutions (MFIs), power distribution companies (Discoms), Real Estate sector and direct taxation," the finance minister told media persons.
In a big decision to boost the MSMEs, collateral-free automatic loans worth 300,000 crores Indian Rupees (around 40 billion US dollars) would be given to as many as 4.5 million MSME units, in a bid to safeguard thousands of jobs.
"No fresh collateral securities will be required from such enterprises to avail this loan, and this would be a four-year term loan," added the finance minister.
A separate sum of 20,000 crore Indian Rupees (around 2.7 billion US dollars) has been earmarked for the stressed MSME units. "Around 200,000 MSME units which faced stress during the lockdown for want of equity would be given this sum," Sitharaman added.
According to her, a "Fund of Funds" amounting 50,000 crore Indian Rupees (around 6.7 billion US dollars) will be provided to those MSMEs which have the potential and viability for expansion.
"The definition of MSMEs is also being changed in favour of MSMEs, even as investment limit has been revised upwards from 250,000 Indian Rupees (33,350 US dollars) to 1 crore Indian Rupees (133,350 US dollars), and services activities will also be included along with the manufacturing sector," said the finance minister.
In order to help the MSMEs in selling their products, they will be provided e-market access in case they are not able to participate in trade fairs and exhibitions.
A sum of 75,000 crores Indian Rupees (around 10 billion US dollars) will be provided to NBFCs, HFCs and MFIs, while around 90,000 crore Indian Rupees (around 12 billion US dollars) will be provided to discoms, which the finance minister said, were facing "unprecedented cash flow problems."
The tax amount on non-salary incomes like professional fee, commission, brokerage, etc. has been reduced by 25 percent.