The coronavirus pandemic is starting to have a significant impact on Indian businesses and has already caused an unprecedented collapse in economic activities over the last few weeks. It has emerged as the black swan event of the century, with significant macroeconomic impact both globally and in India. A recently conducted industry survey said that businesses are grappling with tremendous uncertainty about their future. Jobs are also at risk over the coming months as a lot of firms indicate that they may look at some reduction in manpower in their respective companies.

The uncontrollable spread of COVID-19 has led to a significant fall in major indices, indicating its impact and potential to significantly affect GDP growth. While the overall impact of COVID-19 on credit growth is expected to be negative across most sectors, the degree and nature of the impact are likely to vary based on the duration and extent of disruption.

COVID-19 Startup Assistance Scheme

Startups are dynamic and tend to have a resource-crunch. Currently facing lockdown situations across the nation due to the COVID-19 outbreak, startup founders need to find innovative ways of running their businesses. They need to provide for their working capital requirements and at the same time plan for future growth. The Government of India is taking proactive steps to facilitate businesses and startups impacted by the COVID-19 lockdown.

In this regard, the Small Industries Development Bank of India (SIDBI) has been making efforts to provide financial assistance and stability to such startups through schemes like COVID-19 Startup Assistance Scheme (‘CSAS’). This scheme will assist innovative startups that have demonstrated the ability to adapt to economic impact from Covid-19 and ensured its employees’ safety and financial stability. 

Eligible criteria for startups

  • Government defined startups which have received funding through at least one of the Alternate Investment Fund registered with SEBI.

  • Startups with a minimum employee base of 50 employees. This may also include their foot soldiers (Relaxable on a case-to-case basis). 

  • Startups having FY 2019 and FY 2020 minimum turnover between INR 10 crore to INR 60 crore.

  • Startups should have positive unit economics.

  • Startups should have been incorporated for less than 10 years. 

  • Startups should have a positive net worth.

  • Startups should have demonstrated innovative measures for ensuring business continuity during the COVID-19 period

  • Startups should have taken adequate measures and ensured employee safety and financial stability

  • Promoter/founder of a startup should have invested their capital in the business

1.Collateral-free automatic loan

  • Rs 3 lakh crore outlay, to benefit 45 lakh MSMEs. 

  • Those MSMEs with Rs. 25 crores outstanding in loans and 100 crore turnover will get credit guarantee-backed loans of four-year tenure. 

  • Interest to be capped. 

  • There will be a 12-month moratorium on principal repayment. 

  • Can be availed till Oct. 31.

2.Subordinate debt for stressed MSMEs

  • Rs. 20,000 crore outlay, 2 lakh MSMEs to benefit. 

  • Government to provide Rs. 4,000 crore towards partial credit guarantee support to banks. 

  • Banks will lend money to promoters who can use it to infuse it as equity.

3.Fund of funds for MSMEs

  • Corpus of Rs. 10,000 crores. 

  • Will operate through primary and secondary funds. 

  • Will help leverage Rs 50,000 crore at the secondary fund level. 

  • Will help MSME expand the size, get listed on the mainboard.

4.MSME definition amended

  • Similar limits for manufacturing and services units. 

  • Micro: Investment < Rs 1 crore; Turnover < Rs. 5 crores 

  • Small: Investment < Rs. 10 crores; Turnover < Rs. 50 crores

  • Micro: Investment < Rs. 1 crore; Turnover < Rs. 5 crores

5.Only local bids for government tenders up to Rs. 200 crores

  • Global tenders will be disallowed for government procurement up to Rs 200 crore. 

  • This is to help MSMEs fight unfair competition from global competitors.

6.MSME dues & market access

  • E-market linkage for MSMEs as there will not be any trade fairs and exhibitions soon.

  • All receivables of MSMEs from government and PSUs will be cleared in 45 days

Personal Loan Schemes for Covid-19 Pandemic

To help people in dealing with the cash crunch during the coronavirus pandemic, banks such as Bank of Baroda, Punjab National Bank, Bank of Maharashtra and Bank of India have launched new personal loan schemes. These loans come with relaxed norms for customers. COVID-19 specific loans are primarily offered to existing customers requiring emergency funds to tackle cash flow disruptions, according to experts. Consumers facing liquidity related issues due to the lockdown can consider them.


  • As part of the COVID-19 pandemic related financial resources, a special fund called “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” has been started to help the affected persons. 

  • The Income Tax Act has been amended accordingly to provide the same tax treatment to the PM CARES Fund as to the Prime Minister National Relief Fund. 

  • All the contributions made to the PM CARES Fund is eligible for 100% tax deduction u/s 80G of the Income Tax Act. It should be noted that the deduction limit of 10% of gross income will not be applicable in this case.

  • The donation made to this Fund till 30th June 2020 will be eligible for tax deduction from income of FY 2019-20.

  • Therefore, individuals and corporates who have opted for the new Income Tax Regime for FY 2020-21 can donate to the PM CARES Fund and claim deduction u/s 80G for their income of FY 2019-2020 without losing their eligibility to pay concessional tax for FY 2020-21.

End Note

India’s Finance Minister Nirmala Sitharaman announced several financial assistance measures being implemented by the Government of India because of the Coronavirus disease outbreak. Witnessing the universal spread of Covid-19 or Coronavirus, the Indian government has started to ramp up financial resources to help the economy stay afloat in difficult situations.