Rs 1 lakh crore fund soon to help clear dues to MSMEs: Gadkari

By: |
April 25, 2020 4:47 AM

Speaking at an Assocham webinar, the minister said the fund will be used to clear dues owed to small businesses by state-run entities as well as industries.

In March, Gadkari had said government and private undertakings owed MSMEs almost Rs 6 lakh crore, and that the government was working on an action plan to ensure the payments were cleared in three months. (File image)In March, Gadkari had said government and private undertakings owed MSMEs almost Rs 6 lakh crore, and that the government was working on an action plan to ensure the payments were cleared in three months. (File image)

The government is weighing a proposal to set up a revolving fund of Rs one lakh crore to inject liquidity into small businesses by banks under official credit guarantee to fight the Covid-19 pandemic, MSME and transport minister Nitin Gadkari said on Friday, days after industry raised similar demand for a relief.

Speaking at an Assocham webinar, the minister said the fund will be used to clear dues owed to small businesses by state-run entities as well as industries.

The Centre itself and assorted agencies owned and managed by it are estimated to owe nearly Rs 5 lakh crore to corporate India and some state-run agencies like FCI. A significant portion of these dues are owed to MSMEs. Also, the big private companies owe large amounts to MSMEs.

“We will insure this fund, with the government paying the premium. We will come up with a formula for sharing the interest burden…,” he said. The proposal will be sent to the Cabinet for clearance after the finance ministry gives its clearance, he said.

Gadkari also said he had asked labour minister Santosh Gangwar to utilise the Rs 80,000 crore lying with the Employees State Insurance Corp (ESIC) to address the crisis faced by the MSMEs amid mounting pressure on these small businesses to pay April salaries. This proposal, too, will have to be ratified by the finance ministry and the Prime Minister’s Office (PMO), he said.

In March, Gadkari had said government and private undertakings owed MSMEs almost Rs 6 lakh crore, and that the government was working on an action plan to ensure the payments were cleared in three months. MSMEs, which were already witnessing severe liquidity constraints even earlier, saw their fortune plummet further after the Covid-19 outbreak.

The government is also planning to redefine MSME, based on their annual revenue by replacing the existing definition that relied on self-declared investment on plant and machinery. This will align them better with the GST regime, besides ensuring ease of doing business, he said.

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