Key Points Union Cabinet Meeting 01 June 2020
Written by Gourav Chouhan Dt. June 24th, 2020
On 1 June 2020, Prime Minister Narendra Modi chaired Union Cabinet Meeting. The first meeting of Union Cabinet after 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.
Following are the decisions taken by the cabinet:
Micro, Small and Medium Enterprises
MSMEs are popularly known as the backbone of the Indian economy. In the cabinet meeting on 01 June 2020, MSME sector has been given substantial allocation of 20 lakh crore relief package and has also been accorded priority in implementation of the measure for the economy revival that will help in attracting investments and creating jobs in the MSME sector considering the COVID-19 pandemic and its impact.
Key changes introduced, benefits given to MSMEs are as follows:
The Government of India after 14 years today since the MSME Development Act came into existence in 2006, decided for further upward revision of MSME definition. Following changes in the definition has been introduced:
- For Micro Enterprises: The definition of micro manufacturing and services unit has been increased to Rs. 1 crore of investment and Rs. 5 crore of turnover.
- For Small Enterprises: The limit of small unit has been increased to Rs. 10 crore of investment and Rs 50 crore of turnover.
- Form Medium Enterprises: The limit of a medium unit has been increased to Rs 20 crore of investment and Rs. 100 crore of turnover.
Further, after the announcement of the relief package, representations were received stating that the announced revisions of the definitions are not in tune with market and pricing conditions, therefore; the limit for medium manufacturing and service units to Rs. 50 crore of investment and to Rs. 250 crore of turnover has also been increased.
Furthermore, it has also been decided that the turnover with respect to exports will not be counted in the limit of turnover for any category of MSME units whether micro, small or medium.
Other benefits are as follows:
- Approval for provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. It will benefit 2 lakh stressed MSMEs.
- Approval for equity infusion of Rs. 50,000 crores for MSMEs through fund of funds. This will help MSME in managing debt-equity ratio in their capacity augmentation and also provide opportunity to get listed in stock exchange.
For the Kisan
- The cabinet fixed the MSP at a level of at least 1.5 times of the cost of production for the Kharif season 2020-21 and announced the MSP of 14 crops based on the recommendation of Commission for Agricultural Costs and Prices (‘CACP’). The return over cost for these 14 crops ranges from 50% to 83%.
- The Government of India has extended the repayment date for all Short-Term loans up to Rs.3 lakh advanced for agriculture and allied activities by banks up to 31.08.2020.
- 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.
- Further, loans will be provided to farmers @ 7% per annum through banks, with 2% per annum interest subvention to banks and 3% additional benefit on timely repayment by farmers. Therefore, providing loans up to Rs.3 lakhs at 4% per annum interest.
Incentives for street workers
To enable street vendors, hawkers, thelewalas, rehriwala, etc. resume work and earn livelihoods, the MoHUA has launched a Special Micro-Credit Facility Scheme – PM SVANIDHI – PM Street Vendor’s ATMA NIRBHAR NIDHI for providing affordable loans to street vendors. Over 50 lakh people will be benefitted from the scheme.
In the wake of COVID-19 crises, there is an urgent need to provide affordable credit to the street workers to ensure their business gets a boost. For the first time in India’s history the street vendors from pre-urban/ rural areas have become beneficiaries of an urban livelihood programme and for the first time MFIs/ NBFCs/ SHG Banks have been allowed in a scheme for the urban poor.
Benefits provided are as follows:
- The vendors can avail a working capital loan of up to Rs. 10,000, 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.
- To help the vendor achieve his ambition of going up on the economic ladder, the scheme also provides for escalation of the credit limit on timely/ early repayment of loan.
A digital platform is being developed with web portal/ mobile app to administer the scheme with end-to-end solution and ensure effective delivery and transparency. 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 Udyami Mitra portal of SIDBI for credit management and PAISA portal of Ministry of Housing and Urban Affairs (‘MoHUA’) to administer interest subsidy automatically.
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.
The scheme incentivises digital transactions by the street vendors through monthly cash back.
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.