A second stimulus package the Centre is poised to announce in coming days will be worth around Rs 1 trillion and focus on help for small and medium businesses weathering the coronavirus outbreak, two senior officials said on Wednesday.
Last month, the government outlined a Rs 1.7-trillion economic stimulus plan providing direct cash transfers and food security measures to give relief to millions of the poor hit by an ongoing 21-day nationwide lockdown.
“The second package could be focused largely on MSMEs (micro, small and medium enterprises),” one of the senior government officials, with direct knowledge of the plan told Reuters.
The official said a separate package could be announced for bigger companies after assessing the extent of the hit they have faced due to the lockdown imposed to fight the outbreak.
Small businesses account for nearly one-quarter of India’s $2.9 trillion economy and employ more than 500 million workers, according to government estimates.
The new package aimed at MSMEs could include increases in the limits of bank loans for working capital needs, hiking threshold limits for availing of tax exemptions, and relaxing rules for deposits of income tax and other dues, the people aware of the matter said.
A finance ministry spokesman declined to comment.
The second government source said the government was also planning to partially clear tax refunds owed to small businesses within one month to provide some immediate relief.
The government on Wednesday said it would also release Rs 18,000 crore in tax refunds to small businesses and individuals immediately and impose expenditure curbs on a host of departments for the April-June period.
K E Raghunathan, former president of the All India Manufacturers Association (AIMO), said the government should also clear long-pending dues for the sale of their products to federal and state governments, as well as state-run firms.
Federal and state governments and state-owned companies owe more than $66 billion to small businesses, the government told Parliament last month.
chart“We do not know how long we will be able to survive if our dues are not cleared,” said Raghunathan, a small-time manufacturer of solar parts in Chennai.
Hundreds of thousands of cash-starved Indian small businesses have either deferred or cut their workers' wages this month while trade union leaders said more than 5 million workers, mainly on contract, have suffered wage losses.
Industry body AIMO, which represents some 100,000 small manufacturers, has said more than two-thirds of its members faced problems in paying salaries.
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