Cabinet OK’s Rs 20K cr for MSMEs, hikes MSP for kharif crops
The Government on Wednesday announced a major scheme for the revival of micro, small & medium enterprise and enhanced the minimum support price for kharif crops to ease off the problems of farmers due to Covid-19 and protracted lockdown.
The Cabinet Committee on Economic Affairs (CCEA) announced Rs 20,000 crore financial package for two lakh “stressed” MSMEs and Rs 50,000 crore “Fund of Fund” equity infusion plan to the medium and small units to enable list in stock markets.
Later Prime Minister Narendra Modi launched a dedicated one-stop portal “Champions” for the MSMEs to avail the benefits announced in the Atmanirbhar package.
Detailing the Cabinet announcements, Union Minister Nitin Gadkari and Prakash Javadekar said these two packages will help the millions of MSME units to tide over their bank NPA problems and get more loans as well as new fund infusion. “With today’s approval, implementation modalities and road map for entire components of the Atmnirbhar Bharat Abhiyan package are in place. This will help in attracting investments and creating more jobs in the MSME sector,” said Gadkari, adding that new single window portal ‘Champions’ will take care of the grievances of MSME units and also monitor their applications to banks under the Atmanirbhar packages.
Gadkari said the change in definition of MSME will help the small and medium enterprisers to get more help from financial institutions. He said that the Government has also formed Rs 4,000 crore distressed asset fund for the revival of small and medium units in the country. “The definition of micro manufacturing and services unit was increased to Rs 1 crore of investment and Rs 5 crore of turnover. The limit of small unit was increased to Rs 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of a medium unit was increased to Rs 20 crore of investment and Rs 100 crore turnover.
The revision was done after 14 years since the MSME Development Act came into being in 2006. After the package announcement on May 13, the Government received several representations that the announced revision was still not in tune with market and pricing conditions and it should be revised upwards.
Keeping in mind these representations, the Government decided to further increase the limit for medium manufacturing and service units. Now, it will be Rs 50 crore of investment and Rs 250 crore of turnover. It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium. This is yet another step towards ease of doing business. This will help in attracting investments and creating more jobs in the MSME sector,” said the Government in a statement detailing the financial packages.
Gadkari said that Rs 50,000 crore equity infusion for MSMEs will strengthen their growth potential and will enable them to get listed on stock exchanges. “This is for the first time MSMEs are getting such support. We are changing the definition of MSMEs after 14 years,” he said.
Meanwhile, to ensure remunerative prices to the growers for their produce and encourage farmers amid coronavirus pandemic, the CCEA chaired by Prime Minister Narendra Modi on Monday approved increase in the Minimum Support Prices (MSPs) for all mandated kharif crops by 50-83 per cent for marketing season 2020-21. This will help farmers take a call on which kharif (summer) crop to grow as sowing picks up with the arrival of southwest monsoon.
Accordingly, the MSP for paddy has been fixed at Rs 1,868 from Rs 1,815. The price of the better variety of rice (Grade A) has been proposed at Rs 1,888, up from last year’s price of Rs 1,835. Rice is a major kharif crop, accounting for 40 per cent of the planting in the season. Among cereals, the highest increase is proposed in Bajra where price is likely to be Rs 2,150 per quintal from Rs 2,000, Rs 150 more than last year. Among pulses, highest increment has been recommended for urad, with a proposed rate of Rs 6,000 from last year’s Rs 5,700 a quintal.
The Cabinet has given its approval to extend repayment date up to August 31, for Standard Short-Term loans up to Rs 3 lakh advanced for agriculture and allied activities by banks, which have become due or shall become due between 1st March, 2020 and August 31, 2020 with continued benefit of two per cent Interest Subvention (IS) to Banks and three per cent Prompt Repayment Incentive (PRI) to farmers. The Government’s decision of providing such loans to farmers through banks @ 7 per cent per annum, with 2 per cent per annum interest subvention to banks and 3 per cent additional benefit on timely repayment by farmers thus provides loans up to Rs 3 lakh at 4 per cent per annum interest.