PM Chairs First Cabinet Meeting
of Second Year in Office
· Historic Decisions for MSME Sector, Street
Vendors and Farmers Taken
· MSME Definition Revised for the First Time
after 14 years
· Definition of Medium Units Enhanced further
to Rs 50 crore Investment and Rs
250 crore Turnover
· Special Micro Credit Facility Scheme 'PM
SVANidhi' for providing Affordable Loans to Street Vendors
Launched
· For Kharif season
2020-21, Government Keeps Its Promise of Fixing MSP at a Level of at Least 1.5 times
of the Cost of Production
· Repayment Dates for Short-term Loans for
Agriculture and Allied Activities Extended; Farmers to also Get Benefit of Interest
Subvention and Prompt Repayment Incentive
· Caring for the Poor is the Top Focus of
the Government
[Cabinet
Secretariat Press Release dated 1st June 2020]
The
Union Cabinet, chaired by Prime Minister Narendra Modi met on Monday, 1st June 2020.
This was the first meeting of the Union Cabinet after the Central Government entered
into its second year in office.
During
the meeting, historic decisions were taken that will have a transformative impact
on the lives of India’s hardworking farmers, MSME sector and those working as street
vendors.
Helping
hand to MSMEs:
Micro,
small and Medium Enterprises popularly called as MSMEs are the backbone of Indian
economy. Silently operating in different areas across the country, more than 6 crore
MSMEs have a crucial role to play in building a stronger and self-reliant India.
In
the aftermath of COVID-19 pandemic, PM Shri Narendra Modi was quick to recognise the role of MSMEs in building the Nation. That is
why MSMEs formed a very prominent part of the announcements made under the Atmanirbhar Bharat Abhiyaan.
Under
this package, the MSME sector has not only been given substantial allocation but
has also been accorded priority in implementation of the measures to revive the
economy. Implementation relating to several of the key announcements have been made
already.
Today,
Government of India has laid down the road map for effective implementation of other
announcements under the Atmanirbhar Bharat Package too.
These include:
·
Upward revision of MSME Definition. This
is yet another step towards ease of doing business. This will help in attracting
investments and creating more jobs in the MSME sector;
·
Proposal for provisioning of Rs 20,000 crore as subordinate debt to provide equity support
to the stressed MSMEs has been formally approved by the cabinet today. This will
benefit 2 lakh stressed MSMEs.
·
Proposal for equity infusion of Rs. 50,000 crores for MSMEs through fund of funds has also been
approved by the Cabinet today. This will
establish a framework to help MSMEs in managing the debt-equity ratio and in their
capacity augmentation. This will also provide an opportunity to get listed in stock
exchanges.
Further
upward revision of MSME definition:
The
Government of India today decided for further upward revision of MSME definition.
In the package announcement, 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 of turnover. It may be noted that this revision was done after 14 years
since the MSME Development Act came into existence in 2006. After the package announcement
on 13th May, 2020, there were several representations that the announced
revision is still not in tune with market and pricing conditions and it should be
further revised upwards. Keeping in mind these representations, Prime Minister 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.
Supporting
our hardworking street vendors:
The
Ministry of Housing and Urban Affairs has launched a Special Micro-Credit Facility
Scheme - PM SVANidhi (PM स्वनिधि
)
- PM Street Vendor's AtmaNirbharNidhi,for
providing affordable loans to street vendors. This scheme will go a long way in
enabling them to resume work and earn livelihoods.
Over
50 lakh people, including vendors, hawkers, thelewalas,
rehriwala, the liphadwala etc.
in different areas/ contexts are likely to benefit from this scheme.
The
goods supplied by them range from vegetables, fruits, ready-to-eat street foods,
tea, pakodas, breads, eggs, textiles, apparel, footwear,
artisan products, books/ stationaries etc. The services include barber shops, cobblers,
pan shops, laundry services etc.
The
Government of India is sensitive towards the problems they have faced in the wake
of the COVID-19 crisis. In such a time, there is an urgent need to provide affordable
credit to them to ensure their business gets a boost.
Urban
Local Bodies will play pivotal role in the implementation of the scheme.
This
scheme is special due to a number of reasons:
1-
A historic first:
This
is for the first time in India’s history that street vendors from peri- urban/ rural areas have become beneficiaries of an urban
livelihood programme.
The
vendors can avail a working capital loan of up to Rs.
10,000, which is repayable in monthly instalments in the tenure of one year. On
timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be
credited to the bank accounts of beneficiaries through Direct Benefit Transfer on
six monthly basis. There will be no penalty on early repayment of loan.
The
scheme provides for escalation of the credit limit on timely/ early repayment of
loan to help the vendor achieve his ambition of going up on the economic ladder.
It
is for the first time that MFIs/ NBFCs/ SHG Banks have been allowed in a scheme
for the urban poor due to their ground level presence and proximity to the urban
poor including the street vendors.
2-
Harnessing technology for empowerment:
In
line with the Government’s vision of leveraging technology to ensure effective delivery
and transparency, a digital platform with web portal/ mobile app is being developed
to administer the scheme with end-to-end solution. The IT platform will also help
in integrating the vendors into the formal financial system. This platform will
integrate the web portal/ mobile app with UdyamiMitra
portal of SIDBI for credit management and PAiSA portal
of MoHUA to administer interest subsidy automatically.
3-
Encouraging digital transactions:
The
scheme incentivises digital transactions by the street
vendors through monthly cash back.
4-
Focus on capacity building:
MoHUA
in collaboration with State Governments, State Missions of DAY-NULM, ULBs, SIDBI,
CGTMSE, NPCI and Digital Payment Aggregators will also launch a capacity building
and financial literacy programme of all the stakeholders
and IEC activities throughout the country during the month of June and loaning will
commence in the month of July.
Igniting
the spirit of Jai Kisan:
For
the Kharif season 2020-21, the government has kept its
promise of fixing the MSP at a level of at least 1.5 times of the cost of production.
Today, the MSP of 14 crops for the Kharif season 2020-21
has been announced, based on the recommendation of CACP. The return over cost for
theses 14 crops ranges from 50% to 83%.
The
Government of India has also decided to extend repayment date up to 31.08.2020 for
all Short-Term loans up to Rs.3 lakh advanced for agriculture and allied activities
by banks. Farmers will also get benefit of interest subvention and prompt repayment
incentive.
The
agricultural short-term loan due between 1st March 2020 and 31stAugust
2020 will continue to get benefit of 2% Interest Subvention (IS) to Banks and 3%
Prompt Repayment Incentive (PRI) to farmers.
Government
of India’s decision of providing such loans to farmers through banks @ 7% per annum,
with 2% per annum interest subvention to banks and 3% additional benefit on timely
repayment by farmers thus provides loans upto Rs.3 lakh
at 4% per annum interest.
Interest
Subvention Scheme (ISS) was started to provide concessional short-term crop loans
including loans availed through Kisan Credit Cards to
the farmers. In the last few weeks, many farmers are not able to travel to bank
branches for payment of their short-term crop loan dues. Hence the cabinet decision
would help crores of farmers.
Caring for the poor the Government’s top
focus:
The
poor and vulnerable are at the top of the priorities of the Government led by the
Prime Minister. During the Coronavirus pandemic, right from the day of announcement
of the lockdown, the government has been sensitive to the needs of the poorest of
the poor. This was seen in the announcement of the Pradhan Mantri
Garib Kalyan Yojana package on 26th of March 2020, within just two days of
the start of lockdown.
From
ensuring coverage of around 80 crore people with food security to direct cash transfers
into the bank accounts of 20 crore women, from putting money into the hands of senior
citizens, poor widows and poor Divyangs to front-loading
of the PM-KISAN instalment to crores of farmers, steps were announced. These covered
a wide range of vulnerable sections who would have borne the brunt of the lockdown
if not for the immediate intervention of the government. Moreover, these were not
mere announcements. Within days, assistance reached crores of people directly, either
in cash or kind.
As
part of the Atmanirbhar Bharat initiative, One Nation
One Ration card, free food grains even for those without ration cards, a new affordable
rental scheme for their housing and many more measures have been announced for the
welfare of the migrant labourers.
Massive
reforms were announced for farmer welfare, freeing farmers from the chains that
bound them and giving their income prospects a significant boost. Along with this,
more investments into farm infrastructure were proposed. Allied activities such
as fisheries too received a financial package.
At
every step, the Government of India has shown compassion and alacrity in serving
the needs of the most vulnerable.