Finance and Corporate Affairs Minister Nirmala Sitharaman
Covid-19 Emergency Credit Facility for all firms, not just MSMEs: FM
In a breather for the collapsing Indian economy, Finance Minister Nirmala Sitaraman gave India Inc the assurance of a financial revival by mentioning the all-inclusive nature of the COVID-19 Emergency Credit Facility. Sitharaman clarified that the Rs 3-Lakh Crore the Facility would be available to all companies and not just the micro, small and medium enterprises (MSMEs).
The emergency credit line guarantee scheme (ECLGS) was a part of the Rs 20 lakh crore fiscal the stimulus package, approved by the Finance Ministry on May 21. The scheme will continue till October 31, 2020, or till Rs 3 lakh crore is disbursed, and aims to benefit 45 lakh MSMEs.
The Emergency Credit Line Facility mandates banks to provide term loans to MSMEs and businesses with Rs 100 crore turnover and Rs 25 crore amounting to 20 percent of their outstanding credit as on February 29, 2020. The collateral-free loans have a tenor of 4 years and a moratorium of 12 months on repayment of the principal amount. As the government stands guarantee for the disbursed loans, there’s no need for any guarantee fee from the MSMEs.
To further support the economic revival, Sitharaman also said that the government is considering an extension in the deadline for availing the 15 percent corporate tax rate on new investments. “I will see what can be done. We want the industry to benefit from the 15 percent corporate tax rate on new investments and I take your point for considering an extension in the deadline of March 31, 2023,” said Sitharaman in a discussion with FICCI National Executive Committee Members.
The finance ministry had announced in September that manufacturing facilities starting production before March 31, 2023, and which were incorporated on or after October 1, 2019, would be taxed at only 15%. The tax reforms are a part of measures to attract investments to Indian corporates and fuel industrial growth.
The finance ministry was also keen on looking into issues arising in the availability of liquidity. FM Sitharaman said, “We have fairly clearly addressed the issue of liquidity. There is definitely the availability of liquidity. We will look into it if there are still issues.”
Addressing the need for GST-Reduction in the afflicted industries, FM Sitharaman said “GST rate reduction will go to the (GST) Council. But the council is also looking for revenue. The decision for the reduction in rate for any sector has to be taken by the Council”.