Every registered MSME may be eligible for 20 per cent extra loan, sources say.
The government may pay three-month salaries of employees of small and medium businesses hit by coronavirus and weeks of lockdown, sources said on Wednesday. It also plans to guarantee up to Rs 3 lakh crore of loans to MSMEs or Micro, Small and Medium Enterprises to help them tide over the virus crisis. On Tuesday, PM Modi announced Rs 20 lakh crore - equivalent to 10 per cent of India's GDP -- in fiscal and monetary measures to restart an economy battered by the 50-day shutdown of industries and other economic activities to ensure social distancing and prevent the spread of COVID-19. Finance Minister Nirmala Sitharaman will address the media at 4 pm today to share details of the massive package.
- Sources said the April-June wages of employees of MSMEs may be paid from the Employee State Insurance Corporation.
- The employee insurance funding or ESIC is a self-financing health insurance scheme under the government that is mandatory for employees earning up to Rs 21,000 rupees a month. The ESIC funds, which have Rs 31,000 crore at present, offer compensation in the form of cash up to three months of unemployment.
- The government may also pay the employees' share of provident fund for those in the MSME sector who draw up to Rs 30,000 a month. The limit is currently Rs 15,000. This will cost the government an additional Rs 5,000 crore, say officials.
- A one-year moratorium on loan repayment for MSMEs may also be one of the proposals being considered.
- Small firms may be eligible to borrow an additional 20% of their credit limit, sources said.
- The government may also help small and medium industries in loans by paying a share of the interest or having the loan restructured.
- Small businesses have been the worst hit by the lockdown with their activity coming to a halt. Some 10 crore workers in mining, construction, manufacturing and services sectors have been left jobless due to the lockdown, according to various reports.
- Hundreds of thousands of cash-starved small businesses have either deferred or cut their workers' wages this month, say industrialists and union leaders. The All India Manufacturers Organisation (AIMO)- an industry body representing some 100,000 small manufacturers - said last month that more than two-thirds of its members faced problems in paying salaries.
- Several states had written to the government to allow the use of funds collected under the employee state insurance funds to cover wages or at least a part of it for the lockdown period.
- MSMSe are small and medium-sized businesses with investment in equipment not exceeding Rs 10 crores. Small businesses account for nearly a quarter of India's $2.9 trillion economy and employ more than 50 crore workers, according to government estimates.
