MSME and Farmers Can Now Avail Diminutive Financial Aid
The current adversity has hammered the growth of MSME and wiped them out in the race. To afloat MSME space, the Indian government proclaimed a series of financial assistance plans a while ago. The cabinet has reportedly increased turnover and investment threshold for medium-sized enterprises and also eliminated exports from calculation of these limits apart from offering some support to farmers, reported The Economic Times.
The cabinet has also given a nod to Pradhan Mantri SVANidhi scheme, which issues micro loans of up to INR 10,000 to street vendors. The scheme was included in the Atmanirbhar Bharat Abhiyan that was pronounced last month.
The medium-sized enterprises' investment and turnover limits have been revised and increased to INR 50 crore and INR 250 crore respectively. While the limit for micro and small enterprises has not changed as proclaimed in the package--up to Rs 1 crore investment and turnover limit of INR 5 crore for micro units, and INR 10 crore investment and turnover of up to INR 50 crore for small units.
According to the latest development, exports will not be added in these limits, in turn, freeing micro, small and medium enterprises to easily sell overseas without losing any advantages.
Benefits for Small Business Units
The Cabinet Committee on Economic Affairs has lately given a nod to INR 20,000 crore debt fund and INR 50,000 crore fund-of-funds to provide equity support to MSMEs.
With today's approval, implementation modalities and road map for entire components of the Atmanirbhar Bharat Abhiyan package are in place. This will help in attracting investments and creating more jobs in the MSME sector, The Economic Times reported citing the government’s official statement.
In addition to this, the newly launched scheme, PM SVANidhi (Street Vendor's AtmaNirbhar Nidhi) will offer working capital loans of up to INR 10,000. The loan can be repaid in monthly premiums over a year without any penal provisions. Under this scheme, an interest subsidy of 7 per cent per annum will be also provided on timely repayment, which will be credited to the accounts of beneficiaries via direct benefit transfer bi-annually, according to the cited media agency.
In this situation, small vendors that operate small scale businesses will be able to get a higher credit limit.
It is anticipated that the scheme will be released by the Ministry of Housing and Urban Affairs in July this year. The plan will, in turn, help 5 million people such as hawkers and vendors to recommence their business.
Why are MSMEs Closing Down ?
According to the All India Manufacturers’ Organisation, nearly 35 per cent of micro, small and medium enterprises and 37 per cent of self-employed individuals have started shutting their businesses, saying they saw no chance of a recovery in the wake of the Covid outbreak, reported the cited media agency.
The government's financial package has not reached the MSMEs and is also not adequate to make up for the loss of business activity during the lockdown period, AIMO said in its survey.
AIMO also added that such a "mass destruction of business" was unprecedented.
"India has over 65 million MSMEs employing over 150 million people and over 130 million people are self-employed. This kind of mass destruction of business has not been witnessed since our Independence," KE Raghunathan, the immediate past president of AIMO, was quoted as saying in the company's official statement.
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