Page 12 - Plastics News May 2020

Under the Atmanirbhar Bharat Abhiyan, the minister services such as mid-sized hospitals and diagnostic
announced several measures for MSMEs that are centres. These will now be able to qualify for benefits
expected to help 45 lakh business units resume their offered to MSMEs. Experts suggest that the new
operations.
definition would drive the growth of the MSME sector
The key announcements for MSMEs includes:
and help to make it self-reliant.
Credit guarantee of Rs 3 lakh crore: The massive
increase in credit guarantees to MSMEs is the key
highlight of the government's relief package. The
credit guarantee of 3 lakh crore by the government is
intended to help MSMEs that have a 25 crore
outstanding loan or less than 100 crore turnover. This
provision will rescue MSMEs that need additional
funding to meet operational liabilities and restart
operations. The loans, which should be taken before
October 31, 2020, will have a four year tenure and
moratorium of 12 months. There is a 100% credit
guarantee cover on principal and interest. The credit
guarantee scheme is expected to help MSMEs survive
the economic slowdown. Credit guarantees help
banks meet the credit demand of MSMEs and provide
an assurance that loans will be repaid by the
government. Clearing of dues: While announcing the credit
guarantee for MSMEs, the Finance Minister assured
Subordinate debt for NPA/stressed MSMEs: The
government has set aside 20,000 crore as subordinate that the Centre would clear pending MSME dues in 45
debt to help about two lakh MSMEs with stressed days. As on March 31, 2020, the total outstanding
accounts or non-performing assets (NPA). Under this payments to MSME units were estimated over 4.95
scheme, promoters of the MSME will be given debt, lakh crore. The Central Government ministries and
which will then be infused as equity in the unit.
departments, state governments and public sector
However, unlike credit guarantees, government
support in this scheme is not full but partial. units owe MSMEs more than half of this amount. The
MSME Samadhaan website, which was introduced to
Fund of Funds: The government has created a fund
monitor delayed payments and settle disputes filed
with a corpus of Rs. 50,000 crore for MSMEs with
by affected MSMEs, listed payment claims of 40,720
growth potential and viability. The objective of this
crore as on May 14, 2020.
fund is to infuse equity to help MSMEs expand and
The financial incentives introduced by the
grow. While the government is likely to contribute Rs.
government will rescue MSMEs reeling under the
10,000 crore, while other institutions like SBI and LIC
impact of the lockdown and provide much-needed
are likely to fund the remaining amount. This fund,
liquidity to the sector. Increase in credit guarantees,
which will operate through a mother fund and a few
subordinate debts, clearing of outstanding dues and a
daughter funds, will also help MSMEs get listed on the
broader definition would go a long way to revive the
main board of stock exchanges.
growth of MSMEs and boost the efforts to make the
Revised definition: The government has changed the
country self reliant under the Atmanirbhar Bharat
MSME definition to enable more businesses to benefit
Abhiyan.
from incentives offered in the Atmanirbhar Bharat
Having created 11 crore job opportunities in India
Abhiyan. The new definition of MSME, which had been
while contributing to the GDP by 29%, we can say that
on the government's priority list for long, takes
MSMEs are the heart of the Indian economy. And the
investment and annual turnover into consideration
change in the definition will enable Indian enterprises
and does not differentiate between manufacturing
to carry out their businesses better.
and services. The 'turnover' based definition is seen as
a better means of identifying MSMEs, particularly in
MAY 2020 12 Plastics News