Govt to give 100% credit guarantee for MSME loans upto Rs 3 lakh crore, says FM Nirmala Sitharaman; Congress, TMC criticise PM’s economic package

Finance Minister Nirmala Sitharaman on Wednesday, May 13 announced Rs 3 lakh crore collateral-free automatic loan for businesses, including the MSME sector. Closes to  45 lakh small businesses will benefit. She was briefing media at New Delhi about the mega Rs 20 lakh crore economic stimulus package announced by Prime Minister Narendra Modi last night. The loan will have 4-year tenure and will have a 12-month moratorium, she said. Also, Rs 20,000 crore subordinated debt will be provided for stressed MSMEs, she said adding this would benefit 2 lakh such businesses. The fund for MSME is being created, which will infuse Rs 50,000 crore equity in MSMEs with growth potentials.

MSME definition has been changed to allow units with investment up to Rs 1 crore to be called micro-units in place of Rs 25 lakh now, she added. Also units with turnover up to Rs 5 crore to be called micro-units, she said, adding a turnover based criteria is being introduced to define small businesses. The investment and turnover limits for small and medium businesses have likewise been raised to allow them to retain fiscal and other benefits, she said. Global tenders will be banned for government procurement up to Rs 200 crore, she said, adding this would help MSMEs to compete and supply in government tenders, Sitharaman added. Assessment dates getting barred on September 30, 2020, will be extended to December 31, 2020. Those getting barred on March 31, 2021, will be extended by six months to September 30, 2021, she said. From tomorrow to March 31, 2021, The Govt has reduced TDS and TCS by 25 percent. This will apply to all payments. This reduction is estimated to release Rs 50,000 crore in the hands of the people, the  FM said. The due date for filing Income Tax returns extended. Welcoming the benefit, MSME Minister Nitin Gadkari said the historic steps taken by the government towards Atmanirbhar Bharat will strengthen the MSMEs which are the backbone of the country’s economy. Law and Justice Minister Ravi Shankar Prasad says the  Comprehensive, sound and effective announcements made by Finance Minister will handhold and revive the MSMEs and other stressed sectors due to COVID19, in line with Prime Minister Modi’s vision FM, says banks are not shying away from disbursing loans, but many customers say that they will avail loans after end of lockdown. This is one reason why sanctioned loans are not being released, Sitharaman said and announced Rs 30k crores support for NBFCs, HFCs, MFIs.Her predecessor P Chidambaram says there is nothing in the package for lakhs of poor, hungry migrant workers who have been walking to their homes. ‘’Centre is trying to bulldoze federalism, mislead people with economic package’’, says West Bengal Chief Minister  Mamata Banerjee. (edited by PK Chakravarty)