Government of India announces Rs 20 trillion economic package
Prime Minister Modi has just announced his Government’s economic package in response to coronavirus. The Rs 20-trillion economic package (around 10 percent of GDP) is designed to “make India self-reliant” and ready to "own the twentieth century".
This is a landmark announcement and is expected to give India the required economic boost that its economy needs. We, at the UKIBC, have been advocating for a fiscal stimulus package to support businesses and workers that have been forced to close or reduce output during the lockdown. While the devil is in the details and the delivery, we welcome the ambition of the announcement.
These are exceptional times and call for exceptional measures. As such, we welcome the stimulus package supporting all aspects of the Indian economy including specific reference to small businesses, migrant workers, and farmers, who form the majority of the country’s population.
Finance Minister Nirmala Sitharaman unveiled the first round of details of the special economic package today, a day after Modi’s opening statement, with 15 measures allocated across resources – 6 of them for MSMEs (Micro, Small and Medium Enterprises); 2 for Employee provident funds; 2 for NBFCs (Non-Banking Financial Company); 2 for MFIs (Micro finance Institutions); 1 relating to power DISCOMS (Distribution Companies); 1 for real estate companies; 3 concerning tax; and 1 for contractors.
The announcements today include:- a) for MSMEs, collateral-free loans, liquidity and a revised (wider) definition of MSMEs have been granted; b) a partial credit guarantee scheme to increase liquidity for NBFCs; c) employee PF (employees provident fund) contribution will be paid by Govt. of India until August to the benefit of more than 72 lakh employees; d) an extension of the due date for income tax returns to November 30th; as well as, e) clearance of Rs 5,00,000 tax refunds.
The full list of measures can be found here.
Mr Modi was clear that self-reliance in a globalised world cannot mean a protectionist and closed economy. Rather, it means an economy that is ambitious and promotes frontier technology.
It is good to see the Government acting to get ahead on technology and rightfully position itself to lead the world here and widely across the global economy and on issues such as climate change.
Mr Modi also announced that the Lockdown 4.0 which commences on 18th May – the fourth that India has faced since its first introduction on 24th March – will be a modified version of the current scenario.
We, at the UKIBC, have been impressed with the Governments strict lockdown measures aimed protect the health of its citizens. We have also been impressed at the focus and responsiveness of the Government in helping businesses continue to provide their services in both the essential and increasingly the non-essential sectors. Indeed, we are impressed that over 70% of points raised by UKIBC on behalf of UK business has already been addressed by DPIIT and the relevant authorities.
We will continue to monitor the Government’s further announcements in the coming days and engage with our members, stakeholders and clients to improve the ease of doing business and support UK industry in India.