India has the second highest population in the world and has limited financial resources, as well as insufficient medical infrastructure, was looking very vulnerable to the economic turmoil initially. But the Government of India was dedicated to providing the required assistance to the sectors or industries which were quite susceptible to the loss.
The Ministry of Finance and Reserve Bank of India quickly enacted upon providing relief packages to the industry and the taxpayers of the country. The concerned authorities started preparing for the first response during the first wave, which resulted in the lockdown. It was indeed the most important step to control the escalation of the disaster.
On 12 May 2020, Govt came out with a comprehensive all-inclusive stimulus package which is called ‘Atmanirbhar Bharat Abhiyaan’. This package containing special economic provisions was aimed to provide assistance upto Rs 20 lakh crore for various segments of the society including labourers, cottage industry, middle class, MSMEs, industries, and others.
This is almost equivalent to 10% of the country’s GDP. This included driving focus towards local production and pushing the nation towards self-sustenance and uplifting the country’s global economic positioning. This was a phase-wise programme focusing on five pillars as mentioned below:
i. Indian Economy
ii. Infrastructure in the country
iv. Vibrant Demography
Specific focus areas under the Atmanirbhar Bharat Yojana includes:
Part 1: Businesses including MSMEs
Pan 2: Poor, including migrants and farmers
Pan 3: Agriculture
Pan 4: New Horizons of Growth
Pan 5: Government Reforms and Enablers
The highlights of various imponent reforms provided by Atmanirbhar Bharat Abhiyaan are given below:
Support to MSMEs: Businesses and MSMEs required additional financing to meet their operational demands like paying off existing loans, buying raw material, and restarting the business activities. This was aimed at providing Rs 3 lakh crore worth liquidity for such players in the form of working capital at concessional interest rates. The biggest feature of this reform was that the businesses will not have to provide any collateral to avail such funding. This scheme for emergency credit is supposed to provide financial aid to more than 45 lakh MSMEs in India. Further, the promoters of the MSMEs which are facing financial distress will be given loans upto Rs 20,000 crore which they can further infuse as equity in their businesses. In addition to this, such evolving enterprises will be encouraged to be enlisted on exchanges and a Fund of Funds would be established to provide equity infusion of roughly Rs 50,000 crore.
Support to Non-banking and other financial institutes: It was important for funding agencies to have enough liquidity to create required confidence in the system. So, under this package, a special scheme focusing on the liquidity needs was taken into consideration wherein Government provides assistance upto Rs 30,000 crore by investing it into various debt instruments of such funding bodies in the primary market and secondary market. Further, such entities having low credit ratings are given special consideration through a partial credit guarantee scheme aiming to infuse liquidity to 45,000 crores.
Tax-related measures: A reduction of upto a quarter in the existing rates of TDS and TCS disposable funds upto Rs 50,000 crore. The government decided to swiftly release the pending tax refunds of all the concerned parties. Deadlines to be followed for various compliance-related aspects like income tax return filing, etc. were extended by a few months to provide enough time.
Support to migrants, farmers, and poor: There was a huge migration of labourers within different States amid the declaration of lockdown and consequential job loss. It was the question of day-today survival for such a category of society. The State governments were directed to utilise funds under State Disaster Responses Fund along with central government’s contribution to the tune of Rs 11.000 crores for providing food, shelter, and water to the migrants. This was also followed by providing masks and sanitisers for their safety’ measures. Higher loan disbursement, the extended moratorium on loans, refinancing of loans, sanctioning of Kisan Credit cards were a few of the supportive measures provided towards the agricultural sector. Besides various other financial and nonfinancial assistance, measures were included for the benefit of the poor.
Reforms related to Ease of Doing Business: In the last few years, sustained reforms related to doing business smoothly in India has uplifted its global ranking to 63 in 2019 from 142 in 2014. This included streamlining processes such as self-certification, granting of permits and clearance, and third-party’ certification among others. The government is now focusing on taking things to next level. Major areas would be simplifying the taxation norms, making the registration of property easy, faster resolution of commercial disputes, etc., apart from Rs 40,000 crore increase in allocation for MGNREGS to provide employment boost.
Insolvency and Bankruptcy Code (IBC)-related measures: For providing protection to MSMEs, the minimum threshold was raised to Rs 1 crore from the earlier 1 lakh to start the proceeding for insolvency. Central Government has been given the power to exclude debt related to the pandemic from the definition of ‘default’ for the purpose of initiating insolvency proceedings. Various reforms are implemented in the wake of the current pandemic to address the distress caused in the economy and business.