Lok Sabha Question No. 1793 (UNSTARRED), answered on 2021-02-11
Subject: Financial Support to MSME Sector
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Rahul Gandhi

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 1793 TO BE ANSWERED ON 11.02.2021

## FINANCIAL SUPPORT TO MSME SECTOR

## 1793. SHRI RAHUL GANDHI:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) whether  the  Government  has  assessed  the  impact  of  the  lockdown  and  the  COVID-19 pandemic on MSMEs and if so, the details thereof;
- (b) whether any specific measures have been undertaken by the Union Government to estimate the number of enterprises shut-down and the jobs lost in MSMEs since the lockdown and if so, the details thereof;
- (c) the details of financial support announced by the Government to MSME sector to mitigate the impact of COVID-19 and details of funds sanctioned and actually credited to the account of the beneficiaries;
- (d) whether any suggestions have been received from MSME sector seeking specific relief or support and if so, the details thereof; and
- (e) the decision on the suggestions or relief sought for?

## ANSWER

## MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI NITIN GADKARI)

(a) & (b): Studies have been conducted by National Small Industries Corporation (NSIC) and Khadi and Village Industries Commission (KVIC) to assess the impact of COVID-19 Pandemic on MSMEs  including  units  set  up  under  Prime  Minister's  Employment  Generation  Programme (PMEGP).

- A. The  main  findings  of  the  online  study  conducted  by  NSIC  to  understand  the  operational capabilities  and  difficulties  faced  by  the  beneficiaries  of  NSIC  schemes  amid  Covid-19 Pandemic are as follows:
- i. 91% MSMEs were found to be functional.
- ii. Five most critical problems faced by MSMEs were identified as Liquidity (55% units), Fresh Orders (17% units), Labour (9% units), Logistics (12% units) and availability of Raw Material (8% units.)
- B. The findings of the study conducted by KVIC are as under:
- i. 88% of the beneficiaries of PMEGP scheme reported that they were negatively affected due to Covid-19 while the remaining 12% stated that they were benefitted during Covid19 Pandemic.
- ii. Among the 88% who were affected, 57% stated that their units were shut down for some time during this period, while 30% reported drop in production and revenue.
- iii. Among the 12% who had benefitted, 65% stated that their business increased as they had units in retail and health sector and around 25% stated that their units benefitted as they were dealing with essential commodities or services.

- iv. On  the  question  of  regular  payment  of  salaries  to  the  employees,  around  46.60% respondents  stated  that  they  had  paid  the  salaries  in  full,  42.54%  reported  to  have partially  paid  and  10.86%  reported  to  have  not  paid  salary  for  some  time  during  this period.
- v. Majority  of  the  beneficiaries  expressed  the  need  for  additional  financial  support, relaxation of waiver of interest and marketing support for their products.

(c) to (e): Government  has  received  suggestions  from  MSME  sector  seeking  support  in  the following areas:

- i. Demand for credit by MSMEs
- ii. Request for subordinate debt for stressed MSMEs
- iii. Demand for equity infusion for MSMEs.
- iv. Request for release for pending dues of MSMEs
- v. Norms for declaring NPA period in banks be extended to 180 days for at least next 2 years  as  the  MSMEs  need  uninterrupted  banking  assistance  to  deal  with  this  crisis situation.
- vi. Demand for reduction of Cash Reserve Ratio (CRR) by the banks for MSMEs

Government  has  announced  a  comprehensive  package  of  Rs.20  Lakh  crore,  including  for MSMEs, under Atmanirbhar Bharat Abhiyan (ABA). Announcements pertaining to MSMEs and their current status are given below:

- i. Emergency Credit Line for MSMEs: Government has operationalized Rs. 3,00,000 crore collateral free loan scheme w.e.f. 23.05.2020 which is likely to benefit 45 lakh MSMEs. As on 25.01.2021, loans for an amount of Rs. 2.39 lakh crore have been sanctioned.
- ii. Rs.  20,000  crore  as  Subordinate  Debt  for  Stressed  MSMEs:  As  on  31.12.2020,  249 guarantees have been approved amounting to Rs. 27.27 crore.
- iii. Rs. 50,000 crore Equity infusion for MSMEs through Fund of Funds (FoF): CCEA has approved  a  corpus  of  Rs.  10,000  crore  for  Fund  of  Funds  scheme.      The  detailed guidelines have been issued by the Ministry of MSME.
- iv. Clearing  of  payment  due  to  MSMEs:  Government  has  announced  that  MSME  dues should be cleared by the Government agencies and CPSEs within 45 days.  Since May 2020 and up to 11.01.2021, pending payments of Rs. 26,363.75 crore have been made to MSMEs out of the total dues of Rs. 33,323.92crore.
- v. Reserve Bank of India (RBI) vide its circular dated 01.01.2019 has indicated that MSME account can be restructured on or before 31.03.2020. The borrower will continue to be classified  as  Standard  Asset  till  the  date  of  restructuring.  The  same  has  further  been extended up to 31.03.2021 vide RBI's circular dated 06.08.2020.
- vi. RBI has provided the relief measures  and the CRR of all the banks to be reduced by 100 basis points to 3% of net demand and time liabilities w.e.f March, 28, 2020, which would inject  Rs. 1,37,000 crore across the banking system.
- vii. No Global tenders are permitted for government procurement up to Rs. 200 crore.
- viii. In addition, Ministry of MSME has taken initiatives to provide employment opportunities to  people  including  migrant  workers  in  116  districts  of  6  States  under  Garib  Kalyan Rojgar  Abhiyaan.  Under  PMEGP,  Margin  Money  (subsidy)  amounting  to  Rs.  216.45 crore has been disbursed for setting up 6218 units till 31.01.2021.

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