India - Covid 19 Response Search

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Fiscal Measures

1. Spending Measures (Budget Allocations)

India has introduced $23 billion financial stimulus package to battle the coronavirus pandemic spreading across the country.

Prime Minister Modi announced that an additional 150 billion rupees (about 0.1 percent of GDP) will be devoted to health infrastructure, including for COVID-19 testing facilities, personal protective equipment, isolation beds, ICU beds and ventilators.

2. Tax Measures (Deferral of Payroll Tax Obligations, Extensions of Tax Filing Deadlines)

Extension of the last date for filing of Income Tax from March 31, 2020 to June 30, 2020 for the FY ending March 31, 2019. The interest rate for delayed payment has also been reduced from 12% to 9% in terms of the said filing.

Delayed deposit of TDS till June 30, 2020 permitted with reduced interest rate of 9% from 18%.

Extension in due date for filings of any appeals, returns, applications, reports, and/or any document for which the due date was earlier between March 20,2020 to June 29, 2020, extended till June 30, 2020.

Extension in deadline to link PAN with Aadhaar from March 31, 2020 to June 30, 2020.

Extension in the deadline for settling tax disputes under the Vivad se Vishwaas scheme from March 31, 2020 to June 30, 2020 without payment of any interest and penalty.

3. Subsidies to Preserve Jobs, Employee Benefits, Food Assistance

Manufacturing units can operate as long as they are involved in the manufacture of essential commodities. Critical employees asked to work at the unit.

Ministry of Home Affairs ordered that all employers of commercial establishments are required to pay salary to the workers on the due date without any deductions.

Obligation to pay to all employees, even unproductive permanent employees (i.e. who can't work remotely) for the period that their work is temporarily suspended on account of the government-mandated lockdown.

Government to contribute employer and employee Provident Fund (24%) for the next 3 months in establishments with up to 100 employees, of which 90% earn below INR 15,000 per month.

4. Public Loan Guarantees and Expansion of Loans to Businesses

Lending institutions (which includes all Banks, All India Financial Institutions, Non-Banking.

Finance Companies, Housing Finance Companies) are permitted to grant a moratorium of 3 months on payment of all instalments falling due between March 1, 2020 and May 31, 2020.

Repayment schedule of term loans in respect of whom moratorium has been granted and the residual tenor, to be shifted by 3 months after moratorium. Interest to accrue on outstanding portion of the term loans during moratorium.

5. Student Loan Relief

N/A

6. Insolvency Law Relief

In order to safeguard the interest and existence of Micro Small & Medium Enterprises, the default threshold for commencement of insolvency proceedings has been raised from 1 lakh to 1 crore, however subject to further review.

If the current situation with regard to COVID-19 continues after April 30, 2020, Section 7 (Initiation of Insolvency Proceedings by Operational Creditors) and Section 10 (Initiation of Insolvency Process by Corporate Applicant) of the Insolvency and bankruptcy Code, 2016 may be suspended for a period of six (6) months.

Monetary & Macro Financial Measures

1. Reduction of Interest Rates

The Reserve Bank of India cut the repo rate by 75 basis point. The repo rate now stands at 4.4 percent.

The rate cut will likely cause a heart ache for the fixed deposit investors.

The investors should consider looking into small saving schemes rather than bigger schemes. The interest rate on small savings will be reduced because of the pandemic situation in the country.

2. Expansion of Central Bank’s Holdings of Government Bonds

Nothing has been formulated as now.

3. Other Measures to Support Flow of Credit

The Reserve Bank of India introduced regulatory measures to promote credit flows to the retail sector and micro, small, and medium enterprises and provided regulatory forbearance on asset classification on loans to the micro, small, and medium enterprises.

4. Suspension of Foreclosures/Evictions

N/A

5. Reductions/Suspensions of Mortgage Payments

Moratorium/deferment/recalculation of ‘drawing power’ to enable borrowers to overcome economic distress due to COVID-19 will not be treated as concession or change in terms and conditions of loan agreements due to financial stress under Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated June 7, 2019.

Rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies by the lending institutions.

6. Asset Purchases (Liquidity Facilities, Purchase of Private and Public Sector Securities, Acquiring Equity of Larger Affected Companies)

The Reserve Bank of India has asked the financial institutions to assess the impact on their asset quality, liquidity and other parameters due to spread of the COVID-19 and take immediate contingency measures, including BCPs, to manage the risks following the impact assessment.

7. Exchange Rate Adjustments

A foreign exchange swap ($2 billion; 6 month) has been introduced to provide liquidity to the foreign exchange market through multiple price-based auction.

Health Policy Responses

1. Social Distancing

On March 24, 2020, Indian Prime Minister announced a complete nationwide lockdown for 21 days.

Section 144 of the Criminal Procedure Code was invoked in certain states where demonstrations, processions and protests as well as any cultural, political, religious, academic and seminar and conferences are prohibited.

2. Closure of Public Places for Gathering

Organization of weekly markets, concerts and exhibitions are also banned during this period but those selling vegetables, fruits and essential commodities are given exemption. Guided group tours conducted by private tour operators are also banned.

3. Closure of Non-Essential Businesses

[Same as above]

4. School Closures

Schools are closed in India.

Global Cooperation - International Assistance

USA announced $2.9 million assistance package for India to help the Indian government prepare laboratory systems, activate case-finding and event-based surveillance, and support technical experts for response and preparedness.

Other Measures

The Supreme Court of India has directed that with effect from 15 March 2020, the period of limitation prescribed for filing any pleadings before any Court/ Tribunal across India will stand extended until further orders.

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Published Date
2020-04-15