PM Narendra Modi during his televised address to nation on Tuesday, May 12, 2020, on the covid -19 crisis, announced a fiscal package, spoke about lockdown 4.0 & the path ahead.

He said “this is an unprecedented crisis; we have to protect ourselves and move ahead as well. Becoming self-reliant is only way to make the 21st century belonging to India.

He continued, “We can’t let our lives remain confined around covid-19. We will wear masks and maintain social distancing, but we will not let it affect us…lockdown 4.0 will have completely different rules.

The Prime minister said the country will stand on following five pillars of self-reliance:


  • ECONOMY: ‘An economy that doesn’t bring about incremental change, but makes quantum jumps.’
  • INFRASTRUCTURE: ‘An infrastructure that gives India its modern identity.’
  • SYSTEM: ‘A 21st century system that is based on technology-driven facilities.’
  • DEMOGRAPHY: ‘In the world’s largest democracy, a vibrant demography is our strength.’
  • DEMAND: ‘we need to fully utilise the potential of demand and supply chain.’


The Prime Minister announced a Rs. 20 lakh crore economic package to help individuals and businesses deal with the Covid-19 pandemic and the lockdown enforced to combat its spread, and to, as he put it, turn the crisis in to an opportunity. 

The Prime minister said the package- Atmanirbhar Bharat Abhiyan (Self-reliant India Mission) … would cover “land, labour, liquidity and laws”, industry and businesses of all sizes, and farmers, entrepreneurs and the middle class.

And he repeatedly stressed on the theme of self-reliance and the importance of keeping manufacturing, markets and supply chains local.

He further indicated that details of the package will be announced over the next few day starting Wednesday, by finance minister Nirmala Sitharaman. 



Announcing today on May 13, 2020, the first set of components of the Rs. 20 lakh crore Covid-19 economic stimulus package, finance minister Nirmala Sitharaman said on the measures will help “spur growth and build a very self-reliant India.”


Size of the First stimulus Package as Part of Measures to Help the Economy: Rs, 5, 94,250 crore


  1. Rs. 3, 00,000 crore-Collateral-free automatic loans for business, including MSMEs. 

She said a ₹3 lakh crore emergency working capital facility is provided to businesses in the form of term loans at a concessional rate of interest. “This will be available to units with up to ₹25 crore outstanding and turnover of up to ₹100 crore whose accounts are standard. The units will not have to provide any guarantee or collateral of their own,” she said. The amount will be 100% guaranteed by the federal government benefiting more than 4.5 million MSMEs, she added. 


2, Rs. 20,000 crore – Subordinate debt for stressed MSMEs.

Finance minister Nirmala Sitharaman today announced an Rs 20,000 crore of subordinated debt benefit for stressed micro, small and medium enterprises (MSMEs). She said that 200,000 stressed MSMEs will stand to benefit.

As far as the subordinate debt is concerned, MSMEs which are stressed or are non-performing assets will be eligible for this scheme.

Subordinated debt is an unsecured loan or bond which ranks below other securities or senior loans with respect to the claims on assets or earnings.

Here, if a borrower defaults, the creditors who own subordinated debt will not be paid out until after senior bondholders are paid the dues in full. These loans usually have higher yield and lower credit rating.

“Stressed MSMEs do have a problem of an equity. Hence we want to provide a Rs 20,000 crore subordinate debt for them,” said the finance minister.

Here, the government will provide a contribution of Rs 4,000 crore to Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE). Further, CGTMSE will provide partial credit guarantee support to the banks.

As a result of this, stressed and NPA MSMEs will immediately benefit. Due to these, Sitharaman said that 200,000 stressed MSMEs will stand to benefit. These firms have been finding it tough to get access to funds due to Coronavirus outbreak.

  1. Rs. 50,000 crore –Equity infusion through fund of funds for MSMEs.

Micro, small and medium enterprises (MSMEs) are facing a severe shortage of capital. The Fund of Funds will be set up with a corpus of Rs 10,000 crore.

“The Fund of Funds will be operated through a mother fund and a few daughter funds. The government will provide equity funding for MSMEs with growth potential and viability,” said Sitharaman.

The fund structure will help leverage Rs 50,000 crore at daughter-fund levels. This will help MSMEs expand size as well as capacity. It will encourage MSMEs to get listed on main board of stock exchanges, the government said.

The fund is meant to address the problem of shortage in growth capital for MSMEs, helping those companies in nascent and initial stages as there are no prospects for such units to raise funds through venture capitalists and professional corporations.


  1. Rs. 2,500 crore –EPF support for business and workers for three months –March, April and May.

Finance minister Nirmala Sitharaman on Wednesday announced Rs 2500 crore EPF support for businesses and workers for three months. She said that under Pradhan Mantri Garib Kalyan Package, the payment of 12 per cent of employer and 12 per cent of employee contributions were made into EPF accounts of eligible establishments. 


She further added that it was provided earlier for the salary of March, April and May this year. “This support will be extended by another 3 months to salary months of June, July and August 2020,” she added. 


FM Sitharaman said the scheme will provide liquidity relief of Rs 2500 crore to 3.67 lakh establishments and 72.22 lakh employees.


  1. Rs. 6,750 crore –EPF contribution reduced for business and workers for three months.

It is necessary to provide more take-home salary to employees and also give relief to employers in payment of provident fund dues. Therefore, the statutory PF contribution of both employer and employee will be reduced to 10% each from existing 12 percent each for all establishments covered by EPFO for the next 3 months, amounting to liquidity support of Rs 6750 crore, Union Finance Nirmala Sitharaman announced today. However,

  • CPSEs and state PSUs will, however, continue 12 percent as an employer contribution 
  • This scheme will be applicable for workers who are not eligible for 24 percent EPF support under PM Garib Kalyan Package and its extension
  • This will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees
  • This will provide liquidity of Rs 6750 crore to employers and employees over 3 months


  1. Rs. 30,000 crore –Special liquidity scheme for NBFCs/HFCs/MFIs.

In order to infuse liquidity in the system, particularly for small businesses and rural sector enterprises, the government announced a ₹30,000 crore special liquidity scheme for NBFCs, housing finance companies (HFC) and micro-finance institutions (MFIs). 

The special liquidity scheme for non-banking financial institutions is to provide credit support to the sector amid the coronavirus crisis.

Under the Rs 30,000 crore special liquidity scheme, the minister said investments will be made in both primary and secondary market transactions in investment-grade debt papers of these institutions.

These securities will be fully guaranteed by the government. She said this will provide liquidity support to these institutions and mutual funds and create confidence in the market.


  1. Rs. 45,000 crore –Partial credit guarantee scheme 2.0 for NBFCs.

Another, Rs 45,000 crore partial credit guarantee scheme 2.0 was also unveiled for non-banking financial companies (NBFCs), housing finance companies (HFCs), and microfinance institutions (MFIs) with low credit rating to help them extend loans to individuals and MSMEs. 


These institutions are finding it difficult to raise money from the debt markets, Sitharaman added. Talking about the partial credit guarantee scheme 2.0 (PCGS), she said NBFCs, HFCs, and MFIs with low credit rating require liquidity for fresh lending to MSMEs and individuals.


The existing PCGS will be extended to cover borrowings such as primary issuance of bonds/commercial papers (liability side of balance sheet) of such entities. First 20 per cent of loss will be borne by the guarantor that is the government. She said that AA-rated papers and below, including unrated papers, will be eligible for investment (especially relevant for many MFIs).


  1. Rs. 90,000 crore – Liquidity injection for power companies.

The government on Wednesday announced a Rs. 90,000 crore liquidity injection into fund-starved electricity distribution companies (discoms) as part of a stimulus package to revive the country’s battered economy.


The liquidity injection for the discoms will work like this. State-owned Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse the liquidity by raising an amount of about ₹90,000 crore from the market against the receivables of discoms. The state governments will provide a guarantee.


  1. Rs. 50,000 crore –Liquidity through TDS/TCS rate reduction.

As much as Rs 50,000 crore of liquid cash would be available to taxpayers after the government announced a 25% cut in the rate of tax deducted/collected at source (TDS/TCS). However, the measure is not applicable to salaried taxpayers, finance minister Nirmala Sitharaman said on Wednesday.

“Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc shall be eligible for this reduced rate of TDS. 

In order to reduce tax compliance burdens, the due date of all income-tax returns for assessment year 2020-21 will be extended to November 30, 2020, she said. The date for making payment without additional amount under the ‘Vivad se Vishwas’ scheme will be extended to December 31, 2020, she added.