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Each registered MSME may be eligible for an additional 20 percent loan, according to sources.
New Delhi:
The government is considering a proposal to guarantee up to Rs 3 million in small business loans as part of a plan to restart the coronavirus-battered economy and a 50-day blockade, sources said on Wednesday.
The possible move emerged a day after Prime Minister Modi announced Rs 20 lakh crore, equivalent to 10 percent of India’s GDP, in fiscal and monetary measures.
The government is also believed to be considering a one-year moratorium on loan repayment for MSMEs or Micro, Small and Medium-Sized Businesses.
Small businesses may be eligible to borrow an additional 20% of their credit limit, the sources said.
Confirmed details will be available only when Finance Minister Nirmala Sitharaman addresses the media at 4pm today.
There is also a proposal to pay April to June wages for ESIC MSME employees or Employee State Insurance Corporation, a government self-funded health insurance scheme that is mandatory for employees earning up to Rs 21,000 rupees per month.
The government may also pay the part of the provident fund employees for those in the MSMEs sector who earn up to Rs 30,000 per month. The limit is currently Rs 15,000.
This will cost the government an additional Rs 5 billion rupees.
Small companies have been the most affected by the blockade with their activity stopped. According to various reports, some 10 crore workers in the mining, construction, manufacturing and service sectors have been laid off due to the closure.
Hundreds of thousands of small private cash companies have deferred or cut their workers’ wages this month, say industrialists and union leaders. The All India Manufacturers Organization (AIMO), an industry body representing some 100,000 small manufacturers, said last month that more than two-thirds of its members faced problems paying wages.
Several states had written to the government to allow the funds raised under the state employee insurance funds to be used to cover wages or at least part of it during the closing period.
The ESIC funds, which currently have Rs 31,000 crore, offer cash compensation for up to three months of unemployment.
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