Government May Give INR 1 Lakh Crore Salary Support to MSMEs

In the unlockdown phase, operations have resumed in the Indian market. However, normalcy has not come in the market despite the government's financial package. Owing to this, the  government is planning to take another move to boost the Indian economy. 

According to The Economic Times, the Indian government is deciding to offer salary support upto INR 1 lakh crore to MSME sector for a period of three years. It is one of the options that the government can employ to boost the economy.  

"This is one way to boost the demand in the economy which has been suffering," a senior government official told the cited media agency. 

Presently, there are approximately 6 crore MSMEs operating in the country. These MSMEs are upholding the Indian economy, according to the official. 

The cited report also informs that a minimum number of employees hired by the unit could serve as selection criteria and the support could be extended for upto three years.

With the onset of pandemic, the government is mainly focusing on the MSME sector. In May, it had proclaimed a INR 3 lakh emergency credit line guarantee scheme (ECLGS) under the financial package. ECLGS was rendered by the National Credit Guarantee Trustee Company for funding up to INR 3 lakh crore to eligible MSMEs, as well as MUDRA borrowers, through guaranteed emergency credit line facility. 

Earlier in July, the Finance Ministry launched data about the ECLGS scheme. The data exhibited disbursements done by public sector banks, private sector banks and non-banking financial companies (NBFCs).

In a twitter post, the Finance Minister, Nirmala Sitharaman informed that as of July 1, the total amount sanctioned under the 100 per cent ECLGS by public sector banks and private sector banks stand at INR 1,10, 343.77 crore. Out of which, INR 52, 255.53 crore has already been disbursed. 

As of June 30, 100 per cent ECLGS loans to the MSMEs showed a considerable surge after the June 24 in terms of money offered and also, the number of accounts availing benefit from the credit scheme. 

According to the report, 12 public sector banks disbursed INR 33,349.13 crore in total against the cumulative permitted INR 63,234.94 crore. While 20 private sector banks and 9 NBFCs gave credit up to INR 18,906.40 crore against the cumulative alloted INR47,108.83 crore.