The Union Cabinet approved a package worth Rs 20,000 crores which will be beneficial to 2 lakh Micro, Small and Medium Enterprises (MSME) unit, Union minister Prakash Javadekar stated that. The Centre also approved a Rs 50,000 crore package for the street vendors. Under this package, street vendors, which includes hawkers, cobblers and salons, can acquire aloan of Rs 10,000. Javadekar stated that at least 50 lakh vendors will profit from this scheme.
The union minister further announced that the Centre is going to keep the promise of augmenting the MSP by 150%. he stated that increase in MSP rate would convert into 50-83% profit to the farmers against their cost. This MSP will be pertinent for 14 Kharif crops.
Key decisions taken:
* Cabinet has approved the new definition of the MSME units as proposed by the finance ministry. The micro-units, which were earlier defined by the investment up to Rs 25 lakh and a turn over of Rs 10 lakh, can now invest up to Rs 1 crore and have a turn over of Rs 5 crore.
* When it comes to small enterprises, the investment limit has been increased from Rs 5 crore to Rs 10 crore and turn over limit has been extended from Rs 2 crore to Rs 50 crore.
* For the medium industries, the finance ministry had proposed to hike an investment limit of Rs 10 crores to Rs 20 crores and turn over from Rs 5 crores to Rs 100 crores. But the Cabinet decided, after consulting the industry leaders, to increase the limits further up to Rs 50 crores for investment and Rs 250 crores for turn over.
* Accepting the suggestions made by the industry representatives, the Union Cabinet has decided that the turn over limits for micro, small or medium enterprises will not include the profits made from export. The Cabinet has also redefined MSME to club manufacturing and service sectors as one.
* The Centre also approved a Rs 50,000 crore package for the street vendors. Under this package, street vendors can get a loan of Rs 10,000. Mr Javadekar stated that 50 lakh vendors will gain from this scheme.
* The Reserve Bank of India appointed UK Sinha-led committee on MSMEs had recommended the creation of a distressed asset fund and a fund of funds for the MSMEs. Taking on those recommendations, the Union Cabinet on Monday announced that the deadline for the restructuring of around 25 lakh distressed MSMEs has been extended to December 31. To help these MSMEs restructure themselves the Cabinet has approved a distress fund of Rs 20,000 crores. Under this fund, an MSME can avail a loan of maximum Rs 75 lakh or 15 per cent of their total investment. This will benefit 2 lakh MSME units in distress.
* A whole of Rs 50,000 crore fund announced to reduce MSMEs' reliance on banks. The Centre will utilize this fund to purchase equity of up to 15% in MSMEs which are trading on the share market to give them an intial boost.
* Coming to agriculture sector, the Union Cabinet agreed to increase the minimum support price(MSP) of 14 Kharif crops. The Union minister stated that this increase will augment farmer's profit by 50 to 83%.
* MSP rate for paddy now at Rs 1868 per quintal, jowar-Rs 2620 per quintal, bajra-Rs 2150 per quintal, and 50% hike in ragi, moong, groundnut, soyabean, til and cotton, for the year 2020-21.
* Farmers will also get additional period to pay back their loans, now till August.