Finance Minister Nirmala Sitharaman is expected to announce some measures to boost the economy, which is now also affected by the COVID -19. She is expected to do so when Lok Sabha takes up the Finance Bill for consideration and passage on Monday.

Sitharaman met with senior Finance Ministry officials on Saturday. Though there is no official communication on the outcome, it is believed that the discussion was mainly on sector specific measures to be announced during reply on Finance Bill next week.

On Friday, the Minister held detailed discussion with four Ministries – Micro, Small & Medium Enterprises (MSME), Animal Husbandry, Dairying & Fisheries, Civil Aviation, Tourism (including hospitality) -- which have been affected by the COVID-19.

Sources said that many proposals are under consideration including changing the definition of non-performing assets (NPAs). As of now, non-payment of principal or interest for 90 days or three consecutive EMIs (Equated Monthly Instalments) makes any loan account as NPA. Once the account become NPA, it is difficult for the borrower to get further loan. Industryi has demanded that norm of 90 days should be changed to 180 days or six EMIs. Also, there should be provision for further loan for working capital requirement. According to sources, the Finance Ministry and RBI are in active consultation to find the ways, so that banking sector is also not affected.

Relief in taxation

The other proposal is regarding the relief in taxation, especially Goods & Services Tax (GST). Since business is down in many sectors and is likely to continue for a longer period of time, the Government is considering to rework some of the rules to ease GST compliance process. This would be based on the demands made by the stakeholders.

As of now, businesses (barring those opting Composition Scheme) need to file GST returns by 20th of every month and accordingly deposit tax. There is also suggestion to lower GST on passenger tickets and allow airlines and airport operators to pay taxes in instalments over a period of time.

Since MSMEs have been severely impacted, there is demand that some wage support could be given to workers engaged in these enterprises. All these will entail direct pay out from the Government which is having tough time because of fall in revenue. Many of the experts have already asked for relaxation in fiscal deficit.

The Government has used the escape clause in the Fiscal Responsibility and Budget Management (FRBM) Act to expand the deficit by 50 basis points (100 basis points = one percentage point) for current fiscal and next fiscal. With this the Government has revised fiscal deficit for 2019-20 to 3.8 per cent and for 2020-21 to 3.5 per cent. Now, if deficit is raised by one percentage point, it is expected that the Government will be able to raise more than Rs 2 lakh crore which can be used to mitigate problems for many of the sectors.

Meanwhile, all eyes are on the COVID-19 Economic Response Task Force, under the Chairmanship of Finance Minister. This Task Force will take decisions in the near future, based on regular interactions and feedback from all stakeholders, and analysis of all situations and dimensions. This Task Force will also ensure that all steps taken to reduce the economic difficulties are effectively implemented.