Union Cabinet hike MSP for 14 crops; announces cheap, easy loans for farmers & street vendors

The Union Cabinet today, June 1, 2020, approved major economic support measures for MSMEs, farmers, agricultural sector employees and street vendors. The government has claimed the decisions to be historic.

The decision taken during a union cabinet included change in MSME definition, easing of loans for street vendors and farmers among others. Prime Minister Narendra Modi chaired a meeting of the Union cabinet on Monday as the country entered the first day 'Unlock 1' — centre's three-phased unlocking plan. This is the first meeting of the Union Cabinet after the central government led by Prime Minister Narendra Modi entered into its second year in the office.

The decisions taken at the cabinet meeting were briefed to the media by Union Ministers Prakash Javadekar, Nitin Gadkari and Narendra Singh Tomar. At the beginning of the press conference, Mr Javadekar said that the Cabinet took decisions on MSMEs and agriculture.

Highlights of the conference

Cabinet approved an equity scheme for MSMEs. The Cabinet also approved infusion of Rs 20,000 crore into the sector.

It approved the revision in the definition of MSMEs to Rs 1 crore investment and Rs 5 crore turnaround for micro industries and Rs 50 crore investments and turnaround of Rs 250 crore in medium enterprises. Earlier on May 13, 2020, Finance Minister Nirmala Sitharaman said the government had tweaked the definition of MSMEs to help businesses tide over the current crisis. Sitharaman also said the distinction between manufacturing and service units for MSMEs had been removed.

The credit scheme for street vendors has been approved. The scheme under which a one-time loan of Rs 10,000 will be disbursed to 50 lakh street and footpath vendors. They can return the loan in one year and there are no penal provisions in this loan scheme.

PM SWAN Nidhi, Prime Minister Street Vendors Atma Nirbhar Nidhi scheme launched for street vendors.

Cabinet approved minimum support price (MSP) for 14 Kharif crop, farmers to get 50-83 per cent more than cost.

MSP has been hiked for sunflower seed to Rs 5,885/100 kg, jowar hybrid to Rs 2,620/100 kg, maize to Rs 1,850/100 kg, and tur to Rs 6,000/100 kg.

Farmers will get time till August 31 to repay their loans, and those who clear their dues can avail loans at a 4 per cent interest rate.

Nitin Gadkari has said, MSMEs hold 29 per cent contribution in the country's GDP and 48 per cent share in the country's exports. Investment in plant and machinery can be up to Rs 50 crore, increased from Rs 10 crore.

Stressed MSME fund will invest up to 15% in equity of MSMEs with a strong track record of exports, GST filings, healthy turnover, says Nitin Gadkari.

The government has announced Rs 10,000 crore funds for MSME to get listed in the stock market. Listing in the stock market will make MSMEs attract more funds from the market. Nitin Gadkari said that along with the other investment, this fund will reach Rs 50,000 crore. The government will buy a stake in MSMEs with good ratings.