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Govt to set up Rs 1 lakh crore fund to repay outstanding dues to MSMEs: Nitin Gadkari

The government is working on a separate scheme to address delayed payments issues of MSMEs wherein a dedicated fund will be created for payments to them, says Nitin Gadkari

twitter-logoBusinessToday.In | April 24, 2020 | Updated 20:18 IST
Govt to set up Rs 1 lakh crore fund to repay outstanding dues to MSMEs: Nitin Gadkari
Nitin Gadkari said that organisations should ensure that their workers and executives are taken care of by providing food, shelter and maintaining social distancing norms

Union minister for MSME and Road Transport and Highways Nitin Gadkari on Friday said that the government will set up a Rs 1 lakh crore fund to repay outstanding payments to micro, small and medium enterprises (MSMEs) owned by the central and state government entities, as well as major industries.

"We have decided to set up a fund of Rs 1 lakh crore. We will insure this fund with the government paying the premium. We will come up with a formula for sharing of the interest burden between the paying entity and payment-receiving entity and banks against this fund, for the payments due to MSMEs which are stuck with the PSUs, Centre and State governments and major industries," news agency PTI quoted Nitin Gadkari as saying.

He said that the fund will provide some relief to the MSME sector to tide over the negative impact of novel coronavirus-related disruption in their businesses and revenue losses. The corpus will be a mobile fund that will help increase liquidity in the market, he also said.

"The government is working on a separate scheme to address delayed payments issues of MSMEs wherein a dedicated fund will be created for payments to them," said Nitin Gadkari while interacting via video conferencing with the representatives of the ASSOCHAM on impact of coronavirus on MSMEs.

Gadkari said that "all efforts should be made to make payments immediately and all government departments have been given such directions".

He called upon the industry that while the government has allowed certain industry sectors to start functioning, it is also needed to be ensured by industries that necessary preventive measures are taken to prevent the spread of coronavirus. He emphasised that organisations should ensure that their workers and executives are taken care of by providing food, shelter and maintaining social distancing norms.

Also Read: Coronavirus: Congress seeks Rs 1 lakh crore MSME package, suggests five-point measures

He stressed that there is also a need to focus on import substitution to replace foreign imports with domestic production. He urged enterprises to make use of technology and mentioned that research, innovation and quality improvement can play a major role in industrial development.

The minister recalled that the government of Japan has offered a special package to its industries for taking out Japanese investments from China and moving elsewhere. He opined that it is an opportunity for India and which should be grabbed.

He mentioned that work on Green Express Highway has already started, and this is an opportunity for industry to make future investments in industrial clusters, industrial parks, logistics parks. He opined that there is a need to expand the horizon of industrial clusters in areas other than metro cities and urged that such proposals be submitted to the government.

He said that all the related stakeholders should work together and tap the opportunities that will be created when the COVID-19 crisis gets over. He called upon all sectors to remain positive in adversity.

Also Read: Coronavirus impact: MSMEs likely to get Rs 20,000 crore relief package

Some of the issues pointed out by the representatives and the suggestions given included: prioritising launch of interest subvention scheme, opening the markets along with starting operations of the industries, effective implementation of RBI guideline related to providing additional liquidity to industries, etc.

Shri Gadkari responded to the questions from representatives and requested for sending suggestions and assured all the help from the government. He informed that he would take up the issues with related departments/stakeholders to devise solutions at the earliest.

During this interaction, the representatives of ASSOCHAM expressed concerns regarding various challenges being faced by MSMEs amid coronavirus pandemic along with few suggestions and requested support from the government to keep the MSME sector afloat.

On April 17, the Reserve Bank of India (RBI) did try to ease the liquidity crisis among MSMEs by announcing a targeted long-term repo operations (TLTRO) of Rs 50,000 crore to help small and medium-sized non-banking finance companies (NBFCs) and micro-finance institutions (MFIs).

By Chitranjan Kumar

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