FAQs – MSMEs, Street Vendors and Farmers Announcements of 1st June, 2020
MSMEs (“Micro, Small and Medium Enterprises”) have been working and generating a considerable percentage of employment for the India. They have come up with a healthy competitive market with young and innovative ideas of carrying out businesses.
The Modi 2.0 Government had pushed and encouraged the MSME Sector for the very initiation and have now, even during the difficult times of the pandemic announced a catena of relief measures to uplift the said Sector and help them with the cash flow problems faced by them because of the current economic crisis.
Focusing on MSMEs and Business Enterprises in light of COVID – 19 crisis, the Government through the Finance Minister announced the said relief measures for the said suffering Sectors on 13th May, 2020.
Union MSME, Road Transport and Highways Minister on 1st June, 2020 vide Press Release ID: 1628325 announced measures to offer a helping hand to the 6 Crore MSMEs of the country. Other Ministers also announced Schemes for the street vendors and relaxations for the farmers to help in operating to guide the economy of the country.
These announcements can bring remarkable change in the scenario for example, the revision of definition of Section 7 of the MSME Development Act, 2006 and also the revision of the thresholds for medium enterprises particularly.
The Government amongst many others believe that MSMEs shall drive us all towards a Self- Reliant India therefore, the Government has decided to give them priority while implementing the measures for revival of the economy.
We have covered some frequently asked questions hereunder to solve queries about the said announcements.
REVISION OF THE MSME DEFINITION
1. How has the Government decided to revise the definition of the enterprises governed by the MSME Development Act, 2006?
Answer: The Government has come to a conclusion to further uplift the definition of MSMEs compared to what was announced on 13th May, 2020. The following thresholds have been announced on 1st June, 2020:
Enterprises (Manufacturing & Services Unit)
Rs. 1 Crore
Rs. 5 Crores
Rs. 10 Crores
Rs. 50 Crores
Rs. 20 Crores (which was announced on 13th May, 2020)
Rs. 100 Crores (which was announced on 13th May, 2020)
It is important to note that the export turnover is not to be included in the Turnover of the any of the enterprises.
2. What was the aim and purpose of the revision in definition of MSMEs?
Answer: The Government has revised the definition after 14 years i.e. for the first time after the MSME Development Act, 2006 came into picture. Important changes that are brought into picture are:
- Removed the bifurcation between manufacturing and services units; and
- Brought in the element of turnover limit in the
The aim and purpose of such change is to bring about aggressive growth in the Sector and will help them to grow in size.
It will aid these enterprises to perform better and carry out businesses at a larger scale. They also aim to push medium enterprises to even enter the international market.
THRESHOLD OF MEDIUM ENTERPRISES
3. What changes have been brought into picture in the classification threshold of medium enterprises?
Answer: The Government through the Hon’ble Finance Minister announced the initial change in the definition of MSMEs wherein the threshold of the Medium Enterprises was revised to an Investment of Rs. 20 Crores and Turnover of Rs. 100 Crores.
However, the Government on 1st June, 2020 announced the further revised and upgraded threshold limits for Medium Enterprises i.e. Investment of Rs. 50 Crores and Turnover of Rs. 250 Crores.
4. What other proposals and benefits have been brought to light to benefit the MSMEs?
Answer: The announcements also mentioned two proposals to infuse liquidity in MSMEs catering their growth and helping the stressed MSMEs financially;
- Approval of the provision of Rs. 20,000 Crores as sub-ordinate debt to provide equity support to stressed MSMEs. The Government plans to support the MSMEs with Rs. 4,000 Crores to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). The Banks are expected to provide the subordinate-debt to promoters of MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs; and
- Approval of provision of equity infusion of Rs. 50,000 Crores for MSMEs which are engaged in export operations and have a stabilized turnover shall be benefited vide the Fund of Funds Scheme. This aims to help those who are self-dependent and have potential which will enable the Government to buy a maximum of 15% equity in the enterprise. It also opens an opportunity to get listed on stock exchanges for MSMEs, which a step up on the ladder. It will help in strengthening the unit and encourage exports.
The other benefits announced for MSMEs include the following:
- Announcement of a technology platform vide Press Release ID : 1628317 dated 1st June, 2020 called CHAMPIONS – Creation and Harmonious Application of
Modern Processes for Increasing the Output and National Strength which shall provide facilities like;
- Grievance Redressal
- Capturing New Opportunities
- Identify and Encourage Sparks (i.e. MSMEs having potential)
The Cabinet has announced a Hub & Spoke Model wherein the Hub shall be the office of the Ministry’s Secretary in New Delhi and Spokes shall be situated across the States of the country in various offices and institutions associated with the Ministry of MSMEs.
The Ministry of Finance vide Notification F. No. 12/17/2019-PPD dated 15th May, 2020 amended the General Financial Rules mandating no global tenders for procurement up to Rs. 200 Crores have been carried out.
Mandatory payments of Government dues to MSMEs within 45 days which has been highlight under Press Release ID : 1628345 dated 1st June, 2020.
SCHEME FOR STREET-VENDORS
5. What is Special Micro-Credit Facility Scheme?
Answer: The Modi Government has announced the above-mentioned Scheme which shall also be known as – PM SVANidhi i.e. PM Street Vendor’s Aatma Nirbhar Nidhi. It aims to provide affordable loans to street vendors.
6. What is the object of this Scheme?
Answer: Since the lockdown, the street vendors of the country have faced extreme situations economically and therefore, this Scheme aims to provide them an aid to resume operations and gain earning. The Government aims to reach 50 Lakh people of the country aggrieved by the situation.
In light of the urgent need by this section of the society, the authorities have decided to provide them with credit to rise back on their feet and give their business a boost.
7. Which vendors are eligible for the said Scheme?
Answer: The street vendors includes but does not limit to the goods supplier ranging from vegetables, fruits, ready-to-eat street foods, tea, pakodas, breads, eggs, textiles, apparel, footwear, artisan products, books/ stationaries etc. and the service – providers like barber shops, cobblers, pan shops, laundry services, etc.
8. What is the credit provided by the Government to these vendors under the Scheme?
Answer: The vendors shall be provided with a loan of Rs. 10,000 which is repayable through monthly instalments in the tenure of one year.
If the vendor is able to repay the loan timely or early, the said vendor shall be eligible for an interest subsidy of 7% per annum which will be credited to bank accounts of the beneficiaries via Direct Benefit Transfer on six monthly basis.
There will be no penalty on early repayment of loan.
9. Which banks are allowed to provide loans under the Scheme?
Answer: Micro Finance Institutions, Non-Banking Finance Companies, Self-Help Group Banks amongst other banks are also allowed to provide such loans under the Scheme considering the easy outreach of these institutions to the concerned Section of the society.
10. What other measures are taken by the Government to reach maximum individuals under the Scheme?
Answer: The Government is planning to administer an IT platform / web portal / mobile app to administer the Scheme and provide with the interested people with an end-to-end solution.
The same will also aid in providing the interest subsidy in the eligible vendor’s bank accounts automatically.
The Ministry of Housing and Urban Affairs aim to collaborate with State Governments, SIDBI, Digital Payment Aggregators, etc. to launch a capacity building and financial literacy programmer of all the stakeholders during June, 2020 so that the Scheme can initiate from July, 2020.
ANNOUNCEMENTS FOR KISAN OF THE COUNTRY
11. What steps have been taken by the Government in wake of the anthem of “Jai Kisan”?
Answer: The Government announced the following measures for the farmers of the country:
- For Kharif Season of 2020-2021, the Government has announced Minimum Support Prices for 14 crops and stated that the return over those crops range from 50% to 83%.
- The repayment dated for all short-term loans up to Rs. 3 Lakhs advanced for agriculture and allied activities by banks has been extended up to 31st August, 2020. The farmers will also get benefit of interest subvention and prompt repayment incentive.
- The short-term loans for agriculture due between 1st March, 2020 to 31st August, 2020 will continue to get benefit of the 2% interest subvention to Banks and 3% prompt repayment incentive to farmers. This shall provide farmers loans of up tp Rs. 3 Lakhs at 4% interest per annum.