PM Modi in his speech of 12th May announced a package of 20 lakh rupees. If you look at it closely, it is 10 per cent of the total GDP of India. The eyes of all the countries were on how the package would be divided. Yesterday on 13th, India’s Finance Minister Nirmala Sitharaman also made it clear here that who will get what in the package of 20 lakh crores.
The focus of the economic package is on how to get more money in the hands of employees and companies so that they can spend more and the economy can return back on track.
On Wednesday, the Finance Minister and his team have put the blueprint of the first part of this economic package of 20 lakh crores in front of the country. Let us discuss this economic package in simple language and explain the full meaning of the decisions.
The focus of the economic package is on how to get more money in the hands of employees and companies, so that they can spend more and the economy car returns back on track.
The biggest decision is that TDS (Tax Deduction At Source) deduction on non-salaried income has been reduced by 25 per cent by March next year. Understand this in easy language, whoever is a service provider or professionals, if he works for Rs 10000, then he had to pay 100 rupees tax in it, but now only 75 rupees tax will have to be paid. That means 25 rupees will be saved. With this decision, about 50 thousand crore rupees will come into the hands of people, the amount used to go to the government till now. Income tax returns can also be filled up to 30 November.
Similarly, the share of EPF (Employees Provident Fund) in your salary has also been reduced. Earlier 12 per cent of the salary went to EPF, now only 10 per cent will go. That is, now you will be able to get these hand salary a little more. Think of it like this, if earlier 12 rupees in PF went from your share and 12 rupees from your company’s share, then now 10 rupees will go only i.e. 20 rupees will go to PF instead of 24 rupees. This will also benefit you and your company will also benefit.
Apart from this, the government will fill the amount of PF of employees with a salary of fewer than 15 thousand rupees for the next three months. Under the Pradhan Mantri Garib Kalyan Yojana, it was announced earlier that the government will give part of the PF for the months of March, April and May. Now in the months of June, July and August also the government will give the amount of PF of the share of both the employee and the company. This will benefit three and a half lakh companies and 72 lakh, employees.
The focus of this first part of the economic package is the small and medium industries of our country, to which the livelihood of crores of people is connected. These are called micro, small and medium enterprises i.e. MSMEs. The economy of the country is also largely dependent on this sector.
After agriculture in India, these small industries get maximum employment. About 11 crore people in India work in these small companies. 30% of India’s GDP comes from this sector. These companies account for 40 percent of the country’s total exports.
But in the Corona era, the biggest crisis is on these small and medium industries, because there is a lockdown in the country for the last 50 days, no business is going on. Therefore, if the economy has to be brought back on track, only these small companies will have to be strengthened. This is the reason that these small industries have been given relief first in the economic package.
A loan of Rs 3 lakh crore has been announced for the MSME sector. This will directly benefit about 45 lakh companies. Companies will be able to get loans without any guarantee for business easily. Companies can pay interest after one year. They will get a discount for one year.
The definition of MSMEs has also been changed. Now it will be seen how much companies have invested and how much business is being done. This was not done before. Earlier, companies investing up to 25 lakhs were considered micro, but now only companies with an investment of Rs 1 crore and an annual turnover of up to Rs 5 crore will be considered as micro.
In the same way, small enterprises will be considered as companies with an investment of Rs 10 crore and an annual turnover of up to Rs 50 crore. Medium enterprises will be considered as companies with an investment of up to 20 crores and annual turnover up to 100 crores.
This has been done because our domestic companies could not stand competition in front of foreign companies. There was a limit for these companies, how much amount they could invest. Suppose if a small company wanted to install a machine of 25 lakh rupees to increase its capacity, then it could not do it because it was afraid that it would not get concessions from the government.
Now by increasing the limit of investment, it will happen that the companies have opened up new possibilities for those who want to increase themselves and improve their product, now they can improve their product and their capacity through investment in the market. You will be in a position to compete with foreign companies.
In order to make the local to global, today the rule of global tender of less than 200 crores was abolished, that is, there will be no global tender of less than 200 crores from the government. Now if any order of less than Rs 200 crore comes from the Government of India, then those orders will be received by the domestic companies only.
Understand it this way that if an Indian company is making a pen or pencil and its cost is 100 rupees per piece, till now it used to be that companies from countries like China sold the same product for the price of 80 rupees per piece and got a government order. Used to make taxes and it was difficult for Indian companies to stay in the market.
With this, the government has created an additional fund of 50 thousand crore rupees. This amount will be given to those companies, which reached the state of failure due to debt burden. It has also been ensured in the economic package that the payment of any domestic company should be cleared within 45 days. That is, if a company has taken raw material from a small company, then it will have to pay within 45 days.
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Under the economic package, such big decisions have been taken because the capacity of our domestic industry is increased, they should not be kept in the same scope, they should be encouraged to increase business. This is according to the economic mantra of the Prime Minister, in which he talked about being vocal for the local and globalizing the local.
The economic package of 20 lakh crore rupees has been announced by the government. Of this, 6 lakh crore rupees have been given for the poor, middle class and small and medium industries. But right now the government has not told in detail about where the government will bring the amount of 20 lakh crore rupees economic package? How will the government manage such a huge economic package, which is 10 per cent of GDP? One answer to this is that the government has just increased its borrowings from the market, earlier the government was expected to take a loan of Rs 7.5 lakh crore, but now due to Corona crisis, the government has to raise an additional 4 lakh crore rupees from the market.
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That means the total market borrowing of the government will be around 12 lakh crores. Apart from this, the amount that the government receives from tax and the amount that the government has collected from savings in many schemes, the government will try to manage this economic package. Apart from this, the third source of the economic package is the Reserve Bank of India RBI, which is providing cash to banks, so that banks can lend further.