Special Economic Package or AatmaNirbhar Bharat: 2nd Phase

Hello friends, Today I’m going to explain the topic "Special Economic Package or AatmaNirbhar Bharat: 2nd Phase"

You can read my previous Blogs "Special Economic Package or AatmaNirbhar Bharat: 1st Phase", "Coronavirus(COVID-19): Impact on Real Estate in India", "Coronavirus(COVID-19): Key Announcements on Income Tax, GST, Finance and others", "GST Framework in India" & "GST in India - An Introduction"

The Union Finance Minister Smt Nirmala Sitharaman announced the 2nd  Phase of the Economic Relief Package following the Public Address of the Prime Minister on 12th May 2020. The Prime Minister, announced a special economic package of around Rs 20 lakh crores, amounting to 10% of India’s GDP during his speech to Spur growth, and to build "AatmaNirbhar Bharat"

Announcements Focusing on 

• Migrant workers
• Street Vendors
• Small Traders
• Self Employed People  
• Small Farmers

9 Measures comprising 

• 3 for Migrant Workers
• 1 for Mudra Shishu Loan
• 1 for Street Vendors
• 1 for the Housing Sector
• 1 for Employment generation for Tribals
• 2 for farmers, particularly small farmers.

Migrant Workers

1.  Affordable Rental Housing Complexes (ARHC) for Migrants workers/Urban Poor

• Affordable Rental Housing is going to be made available to Migrant workers by incentivizing manufacturing units, industries, institutions, and associations to develop Affordable Rental Housing Complexes on their private land and operate. Further Central and State Government will make available Affordable Rental Housing Complexes under PPP mode through concessionaires.

2.  MGNREGS support to returning Migrants 

• 4.62 crore person-days of work generated till May 13, 2020, and Actual Expenditure till date is approximately Rs.10,000 crore 
• Work offered to 2.33 crore wage seekers yesterday in 1.87 Lakh Gram Panchayats 
• 40%-50% more persons enrolled, compared to May last year and the Average wage rate rose to Rs. 202 from Rs.182 in last FY 
• Drive being undertaken to enroll returning migrants 
• States/UTs advised providing works to migrant workers as per the provisions of the Act 
• Planning for staying MNREGA works in Monsoon as well: plantations, horticulture, livestock-related sheds. 
• States/ UTs are advised to provide works to migrant workers as per the provisions of the MGNREGS Act.

3.  Support for Migrants and Urban Poor during the last 2 months

• The government of India has permitted State Governments to utilize State Disaster Response Fund (SDRF) for setting up a shelter for migrants and providing them food and water etc. 
• Central Government also released Rs 11002 crore of its contribution ahead to all or any States on 3rd April, to reinforce funds in their SDRF.
• Hygienically prepared three meals each day provided for the residents of Shelters for Urban Homeless (SUH) during the lockdown w.e.f March 28, 2020.
• 12,000 SHGs have produced 3 crore masks and 1.20 lakh liters of sanitizers. This gave additional employment opportunities to the urban poor. 
• Disbursal of fund (RF) to Self Help Groups was on-boarded on PAiSA Portal in April 2020 on a pilot basis in Gujarat and is now being unrolled across all the States in May 2020.
• 7,200 new Self Help Groups of urban poor are formed during the amount starting 15th March 2020.
• Migrants who are neither NFSA or State Card beneficiaries within the state they're stationed are going to be provided 5 kg of grains per person and 1 kg Chana per family per month for two months
• About 8 crores migrants are expected to benefit.
• Rs.3500 Crore will be used on this intervention for 2 months. 
• The cost will be fully borne by the Government of India.

Technology Systems to be used enabling Migrants to access Public Distribution System (Ration) from any Fair Price Shop in India by March 2021 – One Nation One Ration Card 

• Migrant families aren't ready to access food in other states.
• This scheme will enable a migrant beneficiary to access Public Distribution System from any Fair Price Shop within the country (Intra-State portability introduced in 20 States).
• Part of the PM’s Technology-Driven System Reforms.
• 67 crore beneficiaries in 23 states covering 83% of the PDS population are going to be covered by national portability by August 2020.
• 100% National portability is going to be achieved by March, 2021.
• All the States/Union Territories will complete full FPS automation by March 2021
  

Mudra Shishu Loan

4.  Interest Subvention for Mudra Shishu Loans

• Nirmala Sitharaman said that the interest subvention support of 2% for those who have availed loans under Mudra Shishu loan (Rs 50,000 or less) will be given after 3 months moratorium period ends which will benefit over 3 crore people under the Shishu category.
• Interest subvention for Mudra Shishu Loans costs of Rs 1500 crore

Street Vendors

5.  Loans for Streer Vendors

• The government will launch a special scheme worth Rs 5000 crore to facilitate easy access to credit for street vendors to support 50 lakh street vendors.

Housing Sector

6.  Housing CLSS-MIG

• To boost the Housing sector, Nirmala Sitharaman said that the Centre will provide Rs 70,000 crore for it through the extension of Credit Link Subsidy Scheme (CLSS) which was extended to March 31, 2020. The Finance Minister said that the scheme has benefit 3.3 lakh middle-class families so far.
• “This will create jobs and will stimulate demand for steel, cement, and other constructional materials,” Nirmala Sitharaman said.
• 2.5 lakh Middle-Income families will benefit during 2020-21

Employment generation for Tribals

7.  Job creation using CAMPA Funds

• To create jobs for the Tribals and Adivasis, the government said that a plan worth Rs 6,000 crore will be approved shortly under Compensatory Afforestation Management and Planning Authority (CAMPA) Funds. It will create job opportunities in urban, semi-urban, and rural areas.

Farmers

8.  Rs 30000 crore Additional Emergency Working Capital through NABARD

• NABARD will extend additional refinance support of Rs 30000 crore for crop loan requirement of Rural Co-operative banks & RRBs
• Front-loaded on the top facility to 33 state Co-operative banks, 351 District Co-operative banks, and 43 RRBs on top based on their lending.
• To benefit around 3 crores farmers mostly small and marginal farmers.
• To engage post-harvest (Rabi) and current Kharif requirement in May/June.

9.  Rs 2 lakh crore concessional credit through Kisan Credit Cards (KCC)

• Special drive to be undertaken to provide concessional credit to PM-KISAN beneficiaries through KCC
• Fishermen and Animal Husbandry farmers will also be involved in this drive.
• 2.5 crore farmers through KCC which will enable farmers to gain access to institutional credit at concessional interest rates.

Highlights of the Labour Codes and the labor welfare measures which will be brought about in the Labour Codes are as under:

• Minimum wages which are presently applicable to only 30% of workers, will be made universal, after parliament approval.
• The regional disparity in minimum wage will be replaced by a national floor wage concept.
• Fixation of the minimum wage will be simplified, leading to less number of rates of minimum wages and better compliances.
• An appointment letter for all workers will be made Compulsory.
• Annual health checks for workers will be made mandatory.
• It is clear that, the definition of Interstate migrant workers has to be re-looked as not all of them are recruited through agencies, rather, they migrate on their own and are taken on rolls directly by employers. Keeping this in mind, the definition will be changed.
• Pan India, ESI will be made applicable to all districts and will be applicable where more than 10 workers are employed, as against those in notified districts/ areas only.
• For establishments employing less than 10 employees, ESI to be made applicable on a voluntary basis.
• Occupation Safety & Health Code shall also apply to small units engaged in work of hazardous nature even with less than 10 workers.
• Social Security to be made applicable to Gig workers and platform workers.
• Portability of welfare benefits for Migrant workers will be brought about.
• The re-skilling fund will be introduced for retrenched workers especially those who are laid off after COVID-19.
• All occupations are advised to be made open for women even at night with safety provisions made for them.
• A Social Security Fund for unorganized workers will be created.
• Gratuity for fixed-term employment – Provisions of gratuity on completion of one year service as against 5 years will be brought out.

Thanks for reading friends, I will bring more such interesting topics related to Taxation & Updates regarding COVID-19 Impact on various Business Sector as well as Tax implications or Tax Announcements due to COVID-19

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Coronavirus (COVID-19): Impact on Real Estate in India

Hello friends, Today I’m going to explain a topic "Coronavirus (COVID-19): Impact on Real Estate in India"
You can Read my previous Blog "GST in India - An Introduction", "GST Framework in India" & "Coronavirus (COVID-19): Key Announcements on Income Tax, GST, Finance and others"

Summary of the Blog:

1. Residential Real Estate 
2. Commercial Real Estate 
3. Industrial Real Estate 

1. Residential Real Estate

• Housing sector 

According to the Ramesh Nair, CEO & Country Head of JLL India "The injected liquidity of Rs 3.74 lakh crore (by the RBI) along with the 3 months moratorium on all term loans by financial institutions will alleviate short-term liquidity concerns and help developers as well as homebuyers . It is a big relief for developers and buyers to help them mitigate the challenges faced by them currently"
Niranjan Hiranandani, National President, NAREDCO, states that "Salvaging Indian realty, the second-largest employment generator is critical, not only from the GDP growth perspective but also for employment generation, since the sector has a multiplier effect on 250-plus allied industries."
Housing market in India’s top 9 cities (October-December 2019)
Sales                            Down 30%
Project launches          Down 44%
Inventory                     778,627 units
Source: PropTiger DataLabs

https://m.rbi.org.in/scripts/FS_FAQs.aspx?Id=77&fn=2

UCO Bank: The bank has announced the 3 months EMI moratorium on its term loans up to May 31, 2020.
Syndicate Bank: The bank has said, "EMIs of housing loan, vehicle loans, Micro, Small and Medium Enterprise (MSME) loans and payment of all other term loans falling due after 1st March 2020 and upto 31st May 2020 have been deferred by 3 months."

• Home Buyers 

(i) According to the survey by 99acres.com "40% of the prospective homebuyers, who were searching flats for purchase before the lockdown, have postponed their plan while 60% are still keen to buy within the next 12 months."
(ii) Major reasons for delaying their plan to buy were uncertainty in the market (56%) and financial factors (30%), the realty portal said.
(iii) As many as 75% preferred to search for homes online, the survey said

2. Commercial Real Estate

• Office Space 

According to JJL’s report, titled COVID-19 Global Real Estate Implications. “Office utilisation rates will fall as remote working increases and landlords with exposure to short-term leases are the most vulnerable as delay to investment activity and softer rental growth than previously forecast are headwinds to 2020 performance.”

Companies worldwide have announced remote working for employees to contain the virus spread, triggering a debate if Work from Home could replace office space in future.

Demand for remote working and investment in collaboration technologies would grow.
Fast-tracking a widespread adoption of these practices.

• Mall Operators 

“Low footfalls and subsequent closure of malls will impact developers’ debt servicing against the project. Even a relaxation from banks for the short-to-medium term should not have a big impact. However, if the virus scare continues beyond one to two quarters, debt servicing challenges may last for a longer period,” points out Rohan Sharma, research head, Cushman and Wakefield.

Niranjan Hiranandani, National President, NAREDCO, states that “The impact of COVID-19 in the form of shutdown of retail outlets and malls as also entertainment and fitness centers has put commercial real estate deals on a wait-and-watch mode.”

3. Industrial Real Estate

• Builders 

The government is expected to launch support measures for the developer community in order to offset the losses they will suffer on account of the Coronavirus spread, including allowing the force majeure clause to skip penalties over project delays. The 3 months EMI holiday for developers during the crucial period is one measure to offset their losses.

Niranjan Hiranandani, National President, NAREDCO, states that “The pandemic menace has hit at a particularly sensitive time. Across realty companies, this is the time when statutory payouts and streamlining of balance sheets happens. In this challenging time, we have asked the government for some economic interventions like rescheduling loan repayments, a one-time rollover for debt restructuring and deep interest rate cut.”

• Construction sector 

Construction-related Gross Value Added (GVA) and employment are expected to reduce between 15% to 34% and 11%to 25%, respectively, when compared to pre-crisis projections for Financial Year 2021.
Labour costs for skilled workers are expected to rise by 20%-25% while that for semi-skilled workers and unskilled workers is pegged to increase by 10%-15%.
Projects that are under development or Work-in-Progress are likely to take a severe hit with a minimum delay of 2 to 3 months, depending on their geography and spread of COVID-19 in and around the project site.

Indian real estate after Coronavirus: Top 11 projections
Source : Housing.com 

• Site visits to drop, impacting sales numbers.
• Project completion deadlines to extend, pushing completion farther.
• Overall cost of project to increase amid delays and supply constraints.
• Inventory levels to increases, intensifying pressure on builders.
• Prices might move slightly upwards despite the slow demand.
• Home loan interest rates to fall after repo rate cut to 4.4%.
• Remote working to gain traction in future as businesses embrace work from home culture.
• Higher investment likely in future office spaces to make them better prepared for crisis situations.
• Occupancy levels in office spaces to decline in the near term as remote working picks up.
• NRI investment in real estate may improve amid rupee fall.
• Cases of builder insolvency might increase as liquidity situations worsens

Thanks for reading friends, I will bring more such interesting topics related to Taxation & Updates regarding COVID-19 Impact on various Business, Sector as well as Tax implications or Tax Announcements due to COVID-19

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