Apart from this, the Union Cabinet also approved a hike in the minimum support price (MSP) for kharif crops by 150 per cent
New Delhi: Aiming to provide relief to small and medium enterprises (SMEs) and street vendors who have been the most affected by the COVID-19 pandemic the Union Cabinet on Monday cleared a Rs 20,000 crore package for distressed small and medium industries, and also a 'Fund of Funds' of Rs 50,000 crore under which street vendors will be able to avail loans up to Rs 10,000.
Apart from this, the Union Cabinet also approved a hike in the minimum support price (MSP) for kharif crops by 150 per cent.
Union minister Prakash Javadekar said in a press conference after the cabinet meeting that the increase in MSP rate would result in up to 80 per cent profit to farmers against their cost. The increased price is applicable for 14 kharif crops.
Apart from this, farmers have been given an extension of three months to repay their loans. The time limit has been extended from May 31 to August 31, 2020 for them to do so.
Under the Rs 20,000 crores package, around two lakh MSME units will benefit, while under the Rs 50,000 crore package for street vendors, various category of service providers like hawkers, cobblers and salons, would get a loan of upto Rs 10,000. Around 50 lakh vendors will benefit from this package.
The Cabinet also approved the new definition of MSME units as proposed by the finance ministry.
The micro-units, which were earlier defined by the investment of 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.
Also for small enterprises, the investment limit has been upped from Rs 5 crore to Rs 10 crore and turn over limit has been extended from Rs 2 crore to Rs 50 crore.
In the case of 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 has hiked the investment limits by up to Rs 50 crores and Rs 250 crores for turnover.
The RBI-appointed UK Sinha-led committee on MSMEs had recommended the creation of a distressed asset fund and a 'fund of funds' for the MSMEs.
Accepting these 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, 2020.
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.