Major stimulus package for MSMEs and other sectors announced 

  • IASbaba
  • May 14, 2020
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Major stimulus package for MSMEs and other sectors announced 

Part of: GS Prelims and GS-III – Economy

In News:

Several relief measures and packages were announced for MSMEs, salaried workers, contractors recently as part of Atma-Nirbhar Bharat Abhiyaan. 

Key takeaways:


  • ₹3 lakh crore collateral free loan schemes for businesses, especially MSMEs. 
  • For 2 lakh NPAs/stressed MSMEs, ₹20,000 crore as subordinate debt will be facilitated. 
  • A ₹50,000 crore equity infusion through an MSME fund of funds with a corpus of ₹10,000 crore.
  • The definition of an MSME is being expanded to allow for higher investment limits and the introduction of turnover-based criteria. 

For salaried workers and taxpayers 

  • Income tax returns for financial year 2019-20 have been extended with new due date being November 30, 2020. 
  • The rates of tax deduction at source (TDS) and tax collection at source (TCS) have been cut by 25% for the next year. 
  • Statutory provident fund (PF) payments have been reduced from 12% to 10% for both employers and employees for the next three months.

NBFCs, housing finance companies and microfinance institutions 

  • ₹30,000 crore investment scheme fully guaranteed by the Centre. 
  • Partial credit guarantee scheme worth ₹45,000 crore. First 20% of losses will be borne by the Centre. 

Power distribution companies

  • ₹90,000 crore liquidity injection


  • 6 month extension from all Central agencies
  • Partial bank guarantees to ease cash flows

Registered real estate projects 

  • 6-month extension, with COVID-19 to be treated as a “force majeure” event

Employee Provident Fund

  • EPF provided to low-income organised workers under the PMGKY will be extended for another three months.  
  • Mandatory EPF contributions are also being reduced from 12% to 10% for both employees and employers in all other establishments.

Important value additions:

Employee Provident Fund  

  • It is a scheme for providing a monetary benefit to all salaried individuals after their retirement. 

Tax deduction at source (TDS) 

  • As per the Income Tax Act, any company or person making a payment, is required to deduct tax at source if the payment exceeds certain threshold limits. 

Tax collection at source (TCS) 

  • It is the tax payable by a seller which he collects from the buyer at the time of sale.


  • It means a property or something valuable that one agrees to give to somebody if he/she cannot pay back money that he/she has borrowed. 

Subordinate debt 

  • It is debt which ranks after other debts if a company falls into liquidation or bankruptcy. 
  • Such debt is referred to as ‘subordinate’, because the debt providers have subordinate status in relationship to the normal debt. 

Statutory provident fund 

  • It is meant for employees of Government or Universities or Educational Institutes affiliated to University. 


  • It is the value of the shares issued by a company. 

Image source: The Hindu

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