MSMEs benefit under economic relief package announced by India’s finance minister

- Measures announced to revive the economy 

- The economic package is based around the ‘self-reliant India campaign’

India’s Finance Minister Nirmala Sitharaman has announced measures to revive the heavily affected Micro, Small and Medium Enterprises (MSMEs). The measures are a part of the Rs 20 lakh crore economic stimulus announced by the Prime Minister Narendra Modi. The economic package announced by the government is based around the ‘self-reliant India campaign’ to revive the economy that come to a standstill due to the Coronavirus (COVID-19) pandemic. 

The MSMEs contribute 6.11 per cent of the country’s manufacturing GDP. Moreover, the MSMEs also play an important role in India’s automotive component manufacturing. Under the scheme, the MSMEs have been offered collateral free loan from banks and non-banking financial institutions (NBFCs) may constitute up to 20 per cent of the entire outstanding credit as on 29 February. The borrowers with a 100 crore turnover and outstanding amount of up to 25 crore are eligible for the loan for a tenure of four years. The move will help MSMEs resume business and safeguard jobs. A moratorium of one year is also available on payment of principal repayment.

The finance minister has provisioned Rs 20,000 crore as subordinate debt. Even the non-performing MSMEs are included under this scheme. To expand the capacity of viable business prospects, the government has offered funds with a corpus of Rs 50,000 crore.

The government’s newly defined parameters to be constituted as MSME, are as follows -

- Micro enterprises can have investment up to a crore and turnover of up to Rs 5 crore.

- Small enterprises can have investment up to 10 crore and turnover of up to Rs 50 crore.

- Medium enterprises can have investment of up to 20 crore and turnover of not more than Rs 100 crore.