The second stimulus package, to be announced by the centre in the next few days, will cost about Rs. 1 trillion and is intended to help small and medium-sized businesses recover from the coronavirus outbreak, two senior officials named on Wednesday.
Last month, the government developed an economic stimulus package from Rs. 1.7 trillion that includes direct cash transfers and food security measures to help the millions of poor people affected by the 21-day national blockade.
The second package may focus primarily on the RSI (micro, small and medium-sized enterprises), a high-ranking government official with first-hand knowledge of the plan told Reuters.
The official said that a separate package for large companies could be announced after assessing the extent of the strike they were facing in connection with the imposed blockade to combat the epidemic.
Small businesses account for almost a quarter of India’s $2.9 trillion economy and, according to government estimates, employ more than 500 million people.
The new IHR package could include higher limits on bank loans for working capital needs, higher thresholds for tax breaks and relaxed rules on income tax deposits and other fees, said those familiar with the issue.
A spokesman for the Ministry of Finance refused to comment.
A second source within the government said that the government also plans to partially offset small business tax refunds within a month to provide immediate relief.
The government announced on Wednesday that it will also immediately release SEK 18,000 in tax refunds for small businesses and individuals and will subject a number of departments to spending cuts for the period April to June.
K E Raghunathan, a former president of the Indian Manufacturers Association (IMA), said the government should also accept the long-awaited sales charges for their products to federal and state governments and state enterprises.
The federal government, state governments and state-owned enterprises owed more than $66 billion to small businesses last month, according to the parliament.
We don’t know how long we can survive if our contributions are not released, said Ragunathan, a small manufacturer of solar components in Chennai.
Hundreds of thousands of small, wealthy Indian companies have postponed or cut the wages of their workers this month, while union leaders have said that more than 5 million workers, mostly contract workers, have suffered wage losses.
The industry association AIMO, which represents about 100,000 small producers, said more than two thirds of its members had had problems paying wages.