The government last week pledged relief to the poor and the vulnerable – from BPL families, Jan Dhan account holders and construction workers to organised-sector employees — and announced a package of Rs 1.7 lakh crore.
After offering a relief package to the poor and the vulnerable, the government is gearing up for the next round of economic measures that will likely focus on the needs of specific sectors — including MSMEs, exports, tourism, civil aviation and animal husbandry — that have been battered by the Covid-19 outbreak.
Sources told FE that some of the proposals being considered are interest subsidy on loans to MSMEs and collateral-free advances to eligible small businesses with a good repayment history. The government might also impress upon the central bank to consider extending beyond December 2020 a loan restructuring scheme for MSMEs, if the crisis stretches deep into the next fiscal. The government has already asked state-run banks to ensure adequate credit flow to MSMEs.
For exporters, the commerce ministry is considering a slew of proposals, including extending the validity of import permits in certain cases and relaxing the re-export deadline against the duty-free import of inputs under certain schemes, such as the Advance Authorisation Scheme (AAS) and the Export Promotion Capital Goods (EPCG) Scheme.
It is also considering a proposal to waive or defer the payment of ECGC insurance premium on pre–shipment credit.
Besides, the government may ask state-run banks to enhance working capital limit of exporters by 10% without extra documentation. Already, some banks have announced the working capital limit enhancement. However, they are seeking additional documents, say exporters. The finance ministry will be requested to expedite GST refunds and other export benefits under schemes like MEIS, duty drawback and RoSCTL.
While exporters, in a meeting (via video conference) with commerce and industry minister Piyush Goyal on March 27, sought an extension of the validity of the current foreign trade policy by a year to March 2021 to ensure stable policy regime during the crisis, the government will soon take a call on it.
For the aviation sector, the government is considering a proposal to waive or defer the payment by three months additional taxes that airlines have to pay while lifting air turbine fuel (ATF) at airports, said one of the sources. At present, airlines are subject to levies such as ‘throughput charges’, ‘into plane charges’ and ‘fuel infrastructure charges’ when they take the ATF at any airport for their planes. ATF accounts for around 40% of any airline’s total expenditure. Similarly, the payment of other indirect taxes could be deferred.
Federation of Indian Export Organisation president Sharad Kumar Saraf said all manufacturing companies engaged in exports should be allowed to operate, with half the manpower (during the lockdown), after adhering to all the safety, sanitation and social distancing norms; else, the exporters could lose their markets. “Our loss will be China’s gain,” he said, adding the giant neighbour is already offering higher rebate to exporters in the value-added tax. He also asked for the extension of the Interest Equalisation Scheme from April 1.
The government last week pledged relief to the poor and the vulnerable – from BPL families, Jan Dhan account holders and construction workers to organised-sector employees — and announced a package of Rs 1.7 lakh crore. Finance minister Nirmala Sitharaman said more steps were in the offing to soften blows to various stakeholders and the government would respond to the crisis as it evolved.