Atma Nirbhar Bharat – Make in India 2.0

Before yesterday’s address of Honb’le Prime Minister Shri Narendra Modi ji, India was talking about the 1991 economic reform brought by then Finance Minister Dr. Manmohan Singh Ji, which created a new road map for Indian economy and India never looked back. At that time India was facing huge economic crises and the government was in the blink of default. That necessitated to bring a robust and holistic economic reform that fundamentally address to macroeconomic stabilization and structural adjustment.

In the present 21^st century, again India is standing at a situation where it is not only to fight to save and bring back the economy on track but also facing a rare unimaginable pandemic covid-19 situation where the country has come to stand still for almost 2 months. With the lockdown 3.0 coming to an end on 17^th May, the Honb’le Prime Minister after having a marathon discussion with the Chief Ministers of all the Indian states came to address the nation on 12^th May. In his address he laid out a vision to built a self-reliant India and call for “ATMA NIRBHAR BHARAT ABHIYAN” or “SELF-RELIANT INDIA MOVEMENT”.

From day one in his office, the Honb’le Prime Minister has always a vision to make India self-sustainable. In 2014, he had initiated a swadeshi movement called “Make in India” to encourage companies manufacture their products in India and enthuse with dedicated sectoral investments in manufacturing. The present situation warranted to introduce “Make in India 2.0” which not only open road map to re-start Indian economy but also to seize an opportunity with both hands to attract foreign investments in India due to negative sentiment developed against china in the world market. The Honb’le Prime Minister announced special economic and comprehensive package of Rs. 20 lakh crores (equivalent to 10% of India’s GDP) to cater various sections including cottage industry, MSMEs, labourers, middle class, industries among others.

The Honb’le Finance Minister today announced series of measures as the first part of the relief package. Summary of the measures/reliefs/relaxation are listed below:

• 3 lakh crores collateral-free automatic loans for business, including MSME
• 20,000 crore subordinate debt for MSMEs
• 50,000 crore equity infusion through MSME Fund of Funds
• New definition of MSMEs with increased investment limit and turnover criteria.
• Global tenders to be disallowed up to Rs. 200 crore
• Other interventions for MSMEs like payment to be released within 45 days and E-marketing linkage.
• 2500 crore EPF support for business and workers for 3 more months
• EPF contribution reduced for business and workers for 3 months from 12 to 10 percent.
• 30,000 crore liquidity facility for NBFCs/HFCs/MFIs
• 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs
• 90,000 crore liquidity injection for DISCOMs
• Extension of registration and completion date of real estate projects under RERA
• 50,000 crore liquidity through TDS/TCS rate reductions by 25 percent.
• Pending Refunds of assessee other than corporate assessee to be issued immediately.
• Extension of all income tax deturn due date to 30^th November, 2020 and Tax Audit Report to 31^st October, 2020.
• Time barred assessment of 30^th September, 2020 extended to 31^st December, 2020 and of 31^st March, 2021 will be extended to 30^th September, 2021.
• Payment under Vivad se Vishwas Scheme extended till 31^st December, 2020 without additional amount.

In today’s announcement mostly focused was kept on MSME, Financial Institutions, and some tax compliance related measures. MSMEs are the back bone of our economy creating measure chunk of employment opportunities in India. It was necessary to inflow liquidity in them to help them move out of cash crunch situation and to re-ignite the economic activities. The move will create positive sentiment in the industry and build trust among the lower un-organised sectors about the co-operative approach of government. The government is targeting to keep break on the ever sliding unemployment rate and these economic measures will certainly help to stop job cuts as well create new opportunities.

Financial institutions were facing credit related issues and liquidity was a biggest concern for them. With additional infusion of liquidity it will give them scope for furtherance of new credit facilities. Other measures like reduction in TDS/TCS rate and releasing of pending refunds will result more money in the kitty of general public and raise their buying power. It will act as additional fuel in re-igniting the economy. Extension of time limits under various statutes is a welcome move to compensate the loss of time due to lockdown.

With the first innings of financial package gone to the industry segments, looking for the 2^nd innings which way it will turn…..Labour class or Middle Class…..

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P.S. The above views are purely personal in nature and for general reading purpose.