Nirmala Sitharaman’s Economic Relief Package : All Key Announcements

19 May 2020
20 min read
Nirmala Sitharaman’s Economic Relief Package : All Key Announcements

Finance Minister Nirmala Sitharaman on 13th May 2020, announced “reform-driven” steps under the Atmanirbhar Bharat Abhiyan Scheme. Rs 20 lakh crore has been allocated by the government for this scheme as a relief package for the economic losses that the country had to bear due to coronavirus.

All the announcements were made over a period of five days. Here’s a snapshot of the expenditure outlay announced every day or every particular tranche:

Overall Stimulus Package Announced Under Atmanirbhar Bharat Abhiyan Package

Sr No. Tranche Amount Spent (in crores)
1. Tranche 1 Rs 5,94,550
2. Tranche 2 Rs 3,10,000
3. Tranche 3 Rs 1,50,000
4. Tranche 4 and 5 Rs 48,100
Sub Total Rs 11,02,650
5 Earlier measures announced under Pradhan Mantri Garib Kalyan Yojana Rs 1,92,800
6. RBI Measures (Actual) Rs 8,01,603
Sub Total Rs 9,94,403
Rs 20,97,053 

Read on to find out more details on the announcements every tranche.

Day 1: Direct Tax, MSME, NBFC-HFC-MFI | ₹= Rs 5,94,550 crores


Stimulus Provided By Announcements in Part 1
Sr. No. Item Rs. Crores.
1. Emergency Working Capital Facility for Businesses/ MSMEs 3,00,000
2. Subordinate Debt For Stressed MSMEs 20,000
3. Fund of Funds for MSMEs 50,000
4. EPF Support for Business and Workers 2,800
5. Reduction in EPF Rates 6,750
6. Special Liquidity Scheme for NBFC, HFC, MFI 30,000
7. Partial Credit Guarantee Scheme 2.0 for NBFC, HFC, MFI 45,000
8. Liquidity Injection for Discoms 90,000
9. Reduction in TDS/TCS Rates 50,000
Subtotal for Day 1 5,94,550

The measures announced on May 13, 2020 were focused on direct tax, real estate and Micro, Small and Medium Enterprises (MSME). There were also some liquidity measures announced for Non Banking Finance Companies (NBFC), Housing Finance Companies  (HFC) and Micro Finance Institutions (MFI).

A total of 15 measures were announced today and divided across different sectors. Let’s look at these sector by sector for a deeper understanding:

Direct Tax

TDS reduction: Beginning May 14 and until March 31, 2021, TDS and TCS rates have been reduced by 25% from the existing rates across all categories: be its dividend payments or interest on investments and likewise.

This reduction will release around Rs 50,000 crore in the hands of the people. 

Refunds: All pending refunds will be issued immediately to charitable institutions, non-corporates, businesses, partnership and sole proprietorship.

ITR filing date extended: The last date to file ITR is being extended to November 30, 2020, from July 31, 2020. 

Vivaad se Vishwas Scheme:This scheme has been extended to December 31, 2020.

Direct Tax Measures: What does it mean for you?

TDS has been cut on 23 items like dividend payments, interest on deposits, bank accounts, etc. The TDS and TCS reduction is not applicable for tax payers who do not furnish their PAN card. This is for non salaried transactions only. TDS on salary has not been reduced. 

What does this mean for you?

In short, you will be paying less taxes on your financial investments. All the income that you earn from various investments that were applicable for a deduction of 10% TDS will now be reduced by 25% to 7.5%. You will basically get more interest, dividends and income from your Investments because you will be paying less taxes on them. 

Here are a few important ones where you will be paying lesser TDS:

Items for which TDS has been reduced to 7.5% from 10%

  • Dividend
  • Interest on debentures
  • Any amount withdrawn which was deposited under the National Savings Scheme 
  • Payment of compensation on acquisition of immovable property. Immovable property here means any building or land, except agricultural land.

TDS reduced to 3.75% from 5%

  • Proceeds that you received from your life insurance policy were taxable a 5%. Now it has been reduced to 3.75%.


Liquidity relief : Liquidity relief for all EPF establishments with 100 employees and less than Rs 15,000 take-home salary was announced earlier. The government had supported the EPF contributions for both the employer and employee for all such organisations until May 2020.

This relief has been extended for another three months. A liquidity relief of Rs 2,500 crore to 72.22 lakh employees will be provided by extending this contribution until August 2020. 

Statutory PF contribution : The statutory PF contribution for those who are not covered in the earlier measure, both the employer and employee contribution, is being reduced to 10% from 12%.

For Central Public Sector Enterprises (CPSE) and State Public Sector Undertakings (PSU), the government will continue to pay 12% from the employer side however employees will be given the advantage of  contributing 10%. This will increase their take-home pay.

EPF Reduction: What does it mean for you?

Increase in take-home but higher taxes!

If you are a private sector employee, you will be contributing lesser towards your EPF corpus. If earlier you were mandated to contribute 12% of your basic salary towards provident fund, you will now be contributing 10%. This means that.your take home salary will increase. However, another implication of this does tend towards higher incidence of taxes.

Higher income tax: PF contributions can been claimed under section 80 C for income tax deduction. If you chose for the EPF reduction, you will be getting lesser tax benefit because you will be contributing lesser towards your PF. Also, an increase in take home pay will increase your taxable salary and there you may be paying higher income tax. As mentioned before, TDS on salary has not been reduced. That rate remains the same. You can still choose to voluntarily contribute 12% only. 

If you are a government employee, the government will be paying for your and the employer’s (which is GOI itself) contribution. 

Real Estate

Real estate project registrations and completion deadlines can be extended suo moto by 6 months if the projects were registered on or before March 25, 2020. By suo moto the FM means that no individual applications will be required for the extension. As per earlier Rera guidelines, delays in project completion and registration would have invited penalties.

Real Estate Projects Relaxation: What does this mean for you?

The measure announced is good for the developers. However, may be bad news as you might get your house later than the earlier promised delivery date.


Collateral free automatic loan : Around Rs 3 lakh crore will go towards collateral-free loans for the MSME sector. Such enterprises that have Rs 25 crore outstanding loan and 100 crore turnover will benefit from this.

The loan will have a 4-year tenor and no fresh collateral will be required. MSMEs will be given a 12-month moratorium. This is expected to benefit 45 lakh units and will help resume business activity and safeguard jobs. This will aid stranded MSMEs

Subordinate debt provision : Around Rs 20,000 crore-worth debt provision is being provided for stressed MSMEs.

Fund of fund: An equity infusion of Rs 50,000 crore via a fund of the fund will be used to expand capacities and business prospects for MSMEs who are doing well in business otherwise but need a bit of hand holding during such testing times.

Change in definition : The finance minister also changed the definition of MSMEs so that maximum enterprises can benefit from this scheme. For manufacturing and services units, the investment can be up to Rs 1 crore and your turnover can be up to Rs 5 crore to be called as micro-enterprises, Rs 10 crore investment and Rs 50 crore turnover for small enterprises and Rs 20 crore investment and Rs 100 turnover for medium enterprises.

Global Tenders : Global tenders of up to Rs 200 crore will not be allowed. This has been done to support the businesses of home grown MSMEs. 

MSME receivables : Within the next 45 days, all pending MSME receivables will be honoured by the government and CPSEs.

 Existing MSME Classification [ Criteria : Investment in Plant & Machinery or Equipment]

Classification Micro Small Medium
Mfg. Enterprises Investment < Rs  25 Lac Investment < Rs 5 Cr Investment< Rs 10 Cr
Services Enterprise Investment < Rs 10 Lac Investment < Rs 2 Cr Investment < Rs 5 Cr

Revised MSME Classification [ Criteria : Investment & annual turnover]

Classification Micro Small Medium
Manufacturing and services Investment < Rs 1 Cr

& Turnover < Rs 5 Cr

Investment < Rs 10 Cr

& Turnover < Rs 50 Cr

Investment < Rs 20 Cr

& Turnover < Rs 100 Cr

MSME Liquidity Provision: What does it mean for you?

All provisions under MSMEs, if you are a business man, will help you to avail cheap credit easily. This has been done to spur economic activity.


Special liquidity scheme : Rs 30,000 crore is being provided for a special liquidity scheme. This investment will be made in primary and secondary markets. Debt papers of these organisations will be bought by the government.

Not just high quality but even investment-grade papers will be bought for struggling NBFCs. This move is pexted to improve their liquidity situation. 

Partial Credit Guarantee Scheme 2.0 : Around Rs, 45,000 crores is being allocated to cover the liability side of their balance sheets. First 20% of the loss will be borne by the guarantor which is the Government of India.

To expand the scope of benefit, the government will also take over the AA-rated papers and below and even unrated papers will be eligible for investment. This will help microfinance institutions.

On a larger note, the FM and the PM have mentioned that the Atmanirbhar Bharat Abhiyan scheme will be focusing on five pillars of growth:

  • Economy
  • Infrastructure
  • Technology-driven systems
  • Demography
  • Demand

Sitharaman further said that the focus of the mission is on four factors of products: land, labour, liquidity, and law. This would directly mean that ease of doing business, compliance and such issues will have to be taken care of. Both the FM and the PM have stressed on the intention to take local brands and build them on a global scale.

Day 2 : Second Tranche of Economic Relief Package | ₹= Rs 3,10,000 crores


Stimulus Provided By Announcements in Part 2
Sr. No. Item Rs. Crores.
1. Free Food Grain Supply to Migrant Workers for 2 Months 3,500
2. Interest Subvention for Mudra Shishu Loans 1,500
3. Special Credit Facility to Street Vendors 5,000
4. Housing CLSS-MIG 70,000
5. Additional Working Capital through NABARD 30,000
6. Additional Credit Through Kisan Credit Card 2,00,000
Subtotal for Day 2 3,10,000

Finance Minister Nirmala Sitharaman held her second press conference on 14th May to announce the second tranche of the Atmanirbhar Bharat Abhiyan scheme. This scheme particularly focuses on providing an economic relief package for the country to deal with the economic aftermath of coronavirus.

On May 14, Sitharaman focused on economic relief for “those in need”, specifically migrant workers, street vendors, small traders, self employed, small farmers.

1. Measures for Migrant Workers

Free ration for non-card holders : Free food grain supply to all migrant workers will be made available for two months.  Those who are not under the national food security act or state level ration cards, will be given 5 kg of wheat/rice per person and 1 kg of chana per family.

There are around 8 crore migrants according to the government’s estimation for which Rs 3,500 crore will be spent over the next two months.

One Nation One Ration : National portability will be provided on all ration cards so that migrant workers can use their cards in any state. 67 crore beneficiaries in 23 states will be reached which accounts for 83% of the entire public distribution system (PDS). The government aims to reach 100% coverage by March 2021.

Rental housing: A scheme of an affordable rental housing scheme will be targeted for urban migrants and urban poor. This will be achieved by incentivising manufacturing units, industries and association so that they can develop such houses on their private lands.

Government is also funding such houses from its end which will be done in PPP mode through concessionaire agreements.

2. Mudra Shishu Loans

Mudra Shishu Loans will be given interest subvention support of 2% for the next 12 months. Rs 1,500 crore. Mudra Shishu Loans are those loans that can be availed for an amount up to Rs 50,000. Total outstanding in this category is Rs 1.62 lakh crore and approximately 3 crore people will be benefited. 

3. Street Vendors

Liquidity provision of Rs 5,000 crore will be given to provide a special credit facility for street vendors. Within a month, the government will announce this scheme that will benefit around Rs 50 lakh street vendors.

4. Credit Link Subsidy Scheme

CLSS scheme has been extended to March 31, 2021. Lowest strata of the middle income group, who are earning Rs 6-18 lakh annually, will benefit from this. Around Rs 70,000 crore will be spent here. Credit link subsidy scheme will be extended to March 31, 2020. A total of  5.8 lakh families will benefit from this extension. 

This may spur job creation, demand for cement, steel and other construction materials. 

5. Employment Creation Under CAMPA

The government will focus on generating employment for adivasis and tribals under CAMPA, which is the Compensatory Afforestation Fund Scheme, for forestry related work. Around Rs 6,000 crore will be made available.

6. Measures for Farmers

Emergency fund  Rs 30,000 crore additional emergency working capital fund through NABARD will be immediately released. This is to support the post-harvest rabi crop-related work. This is particularly for small and marginal farmers. Regional rural banks and rural cooperative banks will be using this benefit. 

Kisan Credit Card : Rs 2 lakh crore concessional credit will be extended to at least 2.5 crore farmers who do not hold this card now. Animal husbandry and fishermen will now be added in this scheme. This will enable farmers to gain access to institutional credit at concessional rate. 

7. Measures Regarding ESIC ( Employee State Insurance Corporation) 

ESIC to be extended to all organisations . If the employees are less than 10 ESIC can be extended on a voluntary basis. ESIC to be mandatory in hazardous industries.

Day 3: Third Tranche for Agriculture and Allied Activities | ₹= Rs 1,50,000 crores


Stimulus Provided By Announcements in Part 3
Sr. No. Item Rs. Crores.
1. Micro Food Enterprises 10,000
2. Pradhan Mantry Matsya Sampada Yojana 20,000
3. TOP to Total: Operation Green 500
4. Farm-Gate Infrastructure 1,00,000
5. Animal Husbandry Infrastructure Development Fund 15,000
6. Promotion of Herbal Cultivation 4,000
7. Beekeeping Initiatives 500
Subtotal for Day 3 1,50,000

The third tranche of the coronavirus relief package focused on agriculture and allied activities. Around 11 measures were announced on May 15. There will be two more tranches of the covid-19 relied package.

Infrastructure and capacity building

Eight measures were announced under agricultural infrastructure and capacity building.

1. Farm-Gate Infra

Rs 1 lakh crore will be allocated for farm-gate infrastructure, aggregators, primary agriculture cooperative society, and farmer producer organisations for strengthening farm cold chain, post harvest management infrastructure and storage centre. Even private agriculture entrepreneurs and startups which create a market link between our farmers and customers will also benefit

2. Micro Food Enterprises

Rs 10,000 crore for such enterprises for the local value added product to have a global outreach. Health and wellness, nutritional, herbal, organic and products being used alternatives to healthy living.

At least 2 lakh enterprises will benefit. Branding their produce, giving them capacities will be covered. This will be a cluster based approach. Organic and herbal materials specific to the region will be promoted.

FM gave examples of Bihar which can be treated as a makahna cluster, Kashmir that can be treated as a  saffron among others.

3. Logistics, Capacity and Provision of Facilities

Through PM Matsya Sampada Yojana, around Rs 20,000 crore will be provided. This will generate employment of 55 lakh people and double Indian export to reach Rs 1 lakh crore.

Personal boat will be provided to such farmers and insurance for the farmer and the boat. This will lead to additional fish production of 70 lakh tonne in the next five years. 

4. Animal Disease Control

Rs 13,343 crore will be used for animal disease control to ensure 100% vaccination of India’s livestock. 

5. Animal Husbandry Infrastructure Development Fund

Rs 15,000 crore will be spent for dairy infrastructure. Government aims to support private investment in this section as well. 

6. Promotion of Herbal Cultivation

Rs 4,000 crore will be allocated for the promotion of herbal cultivation along 10 lakh hectare. This move might generate Rs 5,000 crore income for farmers. A similar plantation drive for growing herbal and medicinal plants will be conducted alongside Ganga as well across 800 hectares.

7. Beekeeping Activities

Rs 500 crore has been allocated for beekeeping initiatives which will benefit 2 lakh beekeepers.

8. Supply Chain

Rs 500 crore will be allocated for supply chains disrupted because of the lockdown and this includes all perishable items. 50% subsidy on transport and storage will be given. This will be a pilot project for six months.

Governance and Administrative Reforms 

1. Essential Commodities Act

This act has been amended to make sure cereals, edible oil, pulses, onion, potato will be completely deregulated for better price realisation by farmers.  

2. Marketing Reforms For Farmers

A central law will be brought in for farmers to have the choice to sell produce at an attractive price and no barriers for interstate trade which is currently restricted. Farmers should be able to engage in e-trading of his/her produce.

3. Agriculture Produce Price and Quality Assurance

Government will ensure a facilitative legal framework to enable farmers engaging with food processors, large retailers, exporters to fix their own fair price, be able to export, benefit from technology and get better assistance from the  person from them. who is going to buy.

Government will be giving assurance in agricultural produce,price and quality. This is being done so that farmers know well in advance: how much will he get for crop and how much will he have to produce.

Day 4: FM’s Fourth Tranche Focuses on Structural Reforms | ₹= Rs 8,100 crore

Stimulus Provided By Announcements in Part 4 and 5
Sr. No. Item Rs. Crores.
1. Viability Gap Funding 8,100
2. Additional MGNREGA Allocation 40,000
Subtotal for Day 4 and 5 48,100

The finance minister announced the fourth tranche of relief measures on May 16.

The following sectors were targeted:

  • Coal
  • Minerals
  • Defence production, 
  • Civil Aviation: air space management, Maintenance-Repair and Overhaul (MRO), Airports
  • Power distribution companies in Union Territories
  • Space


  • Government removes its monopoly in mining: Commercial mining in the coal sector on a revenue sharing basis would help more coal availability at market prices.
  • Rs 50,000 crore will be spent by the government to evacuate mined coal. The money will be spent on the evacuation structure
  • Entry norms will be liberalised and a total of fifty coal blocks will be offered.
  • There will not be any eligibility conditions


  • A seamless composite exploration cum mining cum production regime will be brought in to make mineral mining easier and increase participation. 
  • 500 mining blocks will be offered through this “open, transparent mechanism”.
  • Join auction of necessary minerals
  • Distinction between captive and non-captive mining companies has been removed
  • Government in the process of creating a mineral index
  • Stamp duty will be rationalised

Defence Production

  • FDI in defence manufacturing increased to 74% from 49%
  • Import of a listed set of equipment will not be allowed
  • This list will be revisited every year to promote the ‘Make in India’ movement
  • This is expected to bring down the Defence Import Bill
  • Realistic setting of qualitative requirements
  • Ordnance factory board to be corporatised 

Civil Aviation

Air Space Management: India’s air space will be rationalised. This will save flying time, fuel and travel costs.

Airports: Six new airports will be auctioned on a PPP model. Private players may get room for investment and around Rs 13,000 crore is expected. 

MRO: Maintenance, Repair and Overhaul of aircraft is a big business.  An MRO infrastructure to be built in India to save costs on aircraft repair. Civil and defence aircrafts will benefit from the MRO. Maintenance cost for all airlines will come down, This will java a ripple effect on the travellers.

Power Discoms in UTs

Power distribution companies in union territories to be privatised. This will be in line with a tariff policy which is soon to be announced. Consumer rights will be focussed on, better service and infrastructure will be ensured.

Creation of social infrastructure projects:  Government has a provision of Rs 8,100 crore for viability gap funding in case of social infrastructure projects, like hospitals, schools, etc. Government has increased the viability gap funding to 30% from 20%. This is expected to bring in more private investment.

Space and Atomic Energy

Private Access: Provision to let private players use the assets available with ISRO will be made. The Finance Minister said  she wants private players and start-ups to “co-travellers” with the government hence the private sector is being given considerable access in the space area.

Geospatial Data: The government will provide remote sensor data to tech entrepreneurs to give advantage to Indian startups who are doing pioneering work. For example, startups which are focussing on irrigation work will be helped who can do better work with help of geo spatial-data.

Research Reactors: A research reactor will be established for the production of medical isotopes in PPP mode. It is increasingly used in cancer treatments.

Food preservation: Government to provide for establishments in PPP mode to manufacture radiation technology for food preservation. Perishable crops like onions will be preserved for a longer period of time.

Day 5:  Reforms around MGNREGA, Health & Education and Compliance Eased For Companies | ₹= Rs 40,000 crore

The last and final day of the announcements surrounding PM Modi’s 20 lakh booster package for the Indian economy focused on the following sectors:

  • Health and Education
  • Businesses
  • Decriminalisation of Companies Act
  • Ease of Doing Business
  • Public Sector Enterprises
  • State Government’s Support

Mahatma Gandhi National Rural Employment Guarantee Act

Government as allocated an additional Rs 40,000 crore to MGNREGA for the current financial year. Budget estimate was Rs 61,000 crore for MGNREGA. 

Health: Rural and Urban

  • Wellness centres and health infrastructure will be ramped up
  • Infectious diseases block to be installed in all centres
  • Public health labs in all hospitals at block levels


  • PM E-Vidya Scheme will be kick started soon. It will be a multi-mode education plan.
  • One Nation One Platform:  One platform for E-Education
  • One Class One Channel: There will be one channel for every class
  • Special content for visually and hearing impaired children
  • Top 100 universities will be accommodate and automatically allowed to start online classes by May 30, 2020
  • Manodarpan Programme: A programme will be launched for the mental health well being of teachers and students

Businesses During Covid-19

  • Any debt that is incurred due to coronavirus will not be included in defaults under IBC
  • No fresh insolvency proceedings will be initiated up to one year
  • For MSME a special insolvency framework will be notified under section 240A under IBC
  • Minimum threshold to initiate insolvency proceedings has been increased to Rs 1 crore from Rs 1 lakh. An ordinance will be used to achieve this goal immediately and the act will be passed once parliament resumes.

Decriminalisation of Companies ACT

  • Violations in technical and procedural nature will be decriminalised
  • Seven compoundable offences will be dropped and five will be dealt under alternative mechanism

Ease of doing business

  • Companies will be able to directly list their securities in foreign jurisdictions
  • Companies listing their NCDs on stock exchange will not be regarded as listed companies
  • Lower penalties for all defaults for small companies, one-person companies, producer companies and start-ups

Public Sector Enterprises

  • A PSE policy will be announced to categorise strategic sectors. All sectors will be opened to private sectors also.
  • At least one PSE will be present in those sectors which get notified where private enterpiseswill also be allowed to pay their role.
  • Totally 1-4 PSEs will be present in such sectors.

State Governments’ Support

States’ net borrowing ceiling has been increased to 5% of the state gross domestic product from 3%. States have a net borrowing ceiling of Rs 6.14 lakh crore, based on 3% of GSDP.  Hence an additional Rs 4.28 lakh crore will be provided.

Here’s how the 3 to 5% increase will be dealt with:

3-3.5% will be released unconditionally

3.5-4.5: The next 1% will be released in four tranches of 0.25% each for the four sectors specified by the government.

The four sectors are:

  • One Nation One Ration Card
  • Ease of Doing Business
  • Power Discoms
  • Urban local bodies

4.5-5%: Last 0.5% will be released if at least three of the four objectives have been achieved.

These should be spent on clearly specified measurable and feasible reforms to make sure that the poor benefit. 

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