Top 5 Benefits of COVID Stimulus Package for Industrial Sectors
During May 2020 Nirmala Sitharaman, the finance minister of India, announced a COVID stimulus package for the various industrial sectors of India. The entire value of this package was 20 lakh crore rupees. This amounts to almost 10% of the GDP. The package covered all the major parts of the country’s economy. RBI (Reserve Bank of India) had been announcing some financial reforms and changes of its own before this. Modi’s reforms complimented them. Thanks to all this financial help you could now buy the factory building you always wanted to and start or expand your business.
Help for the small businesses
The national government has set up a fund of 3 lakh crore rupees for providing collateral-free loans to the MSMEs (micro, small, and medium enterprises). This means that now you would be able to buy an Industrial Space for sale and start your business. Experts also expect that this would help around 45 lakh units save jobs since now they would be able to restart their work with this financial impetus.
Subordinate debt provision
The government has allotted 20,000 crores for subordinate debt provision. This will help 2 lakh MSMEs, which are under immense stress from the economic impact of the virus. The mother-daughter fund for the MSMEs will get an equity infusion of 50,000 crores.
These MSMEs are viable entities but they need all the financial help they can get, especially at such a critical stage of the economy. The government would also set up a fund of funds, which will be worth 10,000 crores. It would provide money from this fund to help small businesses expand their business. So, if you are a small business looking to buy a factory building, this is your chance. You can also use this money and go public with the same.
Redefining the MSMEs
The government has also revised the definition of MSMEs. This means that you could buy a factory for sale and still be eligible for the benefits that the government provides to entities like you. It has also erased the distinction between the MSMEs in the service sector and ones in the manufacturing sector. From now on, it will consider companies with a turnover of fewer than 5 crores and an investment of less than 1 crore as micro-units. Small units would be ones that have a turnover of fewer than 50 crores and investment below 10 crores.
Medium units would be ones with investments of less than 20 crores and turnover of fewer than 100 crores.
The government would also make sure it provides e-market linkages to all companies unable to take part in trade fairs because of COVID. The PSUs (public sector undertakings) and the central government would pay all the money due to the MSMEs by the end of June 2020. With this money, you would find it easier to buy your favorite factory property for sale.
Help for the non-bank lenders
The government has set up a special liquidity scheme of 30,000 crore rupees. It would use the money to back investment-grade debt papers being sold by the NBFCs (non-banking financial companies), MFIs (micro-finance institutions), and HFCs (housing finance companies). These are NBFCs that lend money to the MSMEs. So, if you are an MSME now you could buy a cheap factory property for sale and thus expand your business. The government would back these investments. It has also set up a partial credit guarantee scheme worth 45,000 crore rupees for the NBFCs.
In these funds, it will bear the first 20% loss that an investor suffers since it is the guarantor too.
From now on the government would also not allow global tenders for projects and contracts that are worth less than 200 crores.