Key Highlights: Finance Ministry’s First Economy Booster Package
Mantra:
Increasing cash flow and energizing markets
Automotive
Sector
- Vehicles
registered by March 2020 will be allowed to retain their registration
- An
additional depreciation of 15% (total depreciation allowed increased to 30%)
will be applicable for all vehicles purchased before March 2020
- Government
departments will be actively told to replace their old vehicles with new ones
- Government
will actively consider a scrappage policy for older vehicles but is limited by
a lack of infrastructure at this time
Capital
Markets
- Enhanced
surcharge on FPI & domestic investors no longer applicable; pre-budget
position restored. Loss to exchequer to the tune of Rs. 1,400 crores.
- Additional
credit expansion for public sector banks, FM releases upfront Rs. 70,000 crores
which will lead to additional systemic capital expansion of Rs. 5 lakh crores
- All
banks have decided to pass any rate cut through MCLR to end customers
- All
banks have agreed to directly link repo rates with interest rates
- Banks
will return security related documents to customers within 15 days of the
closure of the respective loan
- Online
tracking of loan application (all types of facilities) will be available to
borrowers– improving turnaround time
- Honest
decision making in banks to be promoted through identification of accounts
under vigilance
- Additional
liquidity support for Housing Finance Companies (HFCs) of Rs. 10,000 crores
(taking it to Rs. 30, 000 crores) from the current Rs. 20,000 crores
- Focus
on partial credit guarantee scheme, quick pooling of assets and liquidity
provision to NBFCs
- NBFC
can use Aadhar related KYC for loan processing so that the process is not
repeated
- Co-origination
of banks will also apply to NBFCs as well so that synergy between the two is
heightened and the systemic excess liquidity utilized properly.
- More
on Credit default swaps market to follow
- RBI
will be supporting bond issuances and price discovery
- Depositary
Receipt Scheme: ADR and GDR financing for Indian firms
- Aadhar
to be KYC for mutual fund investments and Demat accounts
- Offshore
rupee market will be brought to domestic market and FM/ RBI will allow
Rupee-USD derivatives trade at GIFT Special Economic Zone. More details to
follow.
MSMEs
- Section
56 (2b), Angel Tax will not be applicable for registered startups
- A
member of Central Board Direct Taxation (CBDT) will head a cell for quick
resolution of problems faced by registered startups
- Banks
to have one-time settlement provisions for MSMEs
- All
pending GST refunds pertaining to MSMEs will be paid within 30 days
- Every
GST related refund in the future will be cleared within 60 days for MSMEs
- Recommendations
of the UK Sinha Committee have been adopted for MSMEs
Infrastructure
- An
organization to provide credit enhancement for providing infrastructure and
other housing projects. Name of the institution revealed soon.
- Delayed
payment from Government departments and CPSCs to the infrastructure related
vendors/ contractors will be monitored and payments expedited
- Inter-ministerial
task force set-up for the envisioned Rs. 100 lakh crore investment in
infrastructure as it is critical for the eco-system
- Central
Tax Revenue targets are official and are fully attainable. No revision on this
end.