A day after Indian Prime Minister announced a $266 billion economic stimulus to the Covid-19 struck economy, finance minister Nirmala Sitharaman announced details of the package. In a major relief to the micro, small and medium enterprises (MSME) sector, Sitharaman on Wednesday announced collateral-free $40 billion credit support to small businesses.
Addressing a press conference in New Delhi, Sitharaman announced six relaxations for the MSME, two for the employee provident fund, two for non-banking finance companies (NBFCs), one each for the stressed power distribution companies, contractors and real estate sector and three tax relief measures.
“Collateral free automatic loan of $40 billion will be provided to the MSMes. There will be 100 percent credit guarantee on these loans. It will benefit 4.5 small business units and at least 12 million workers,” said Sitharaman.
The Indian government also announced $2.66 billion subordinate debt for MSMEs that have not serviced their bank debts. The government has also announced $4 billion special liquidity window for the NBFCs.
Sitharaman will hold more press conferences this week to announce other relief measures in the package announced by Prime Minister Narendra Modi on Tuesday.
On the tax front, the Indian government has provided a 25 percent rebate on tax deduction at source to boost market liquidity.