The Union Cabinet meeting, chaired by Prime Minister Narendra Modi, approved a distressed asset fund for MSMEs to facilitate the provision of Rs 20,000 crore as subordinate debt on Monday, June 1. This was the first meeting of the Union Cabinet after the Central Government entered into its second year in office.

During the meeting, historic decisions were taken that will have a transformative impact on the lives of India's hardworking farmers, the MSME sector, and those working as street vendors.

cabinet meeting today
Massive reforms were announced for farmer welfare, freeing farmers from the chains that bound them and giving their income prospects a significant boost.Twitter

The MSME scheme was announced by Finance Minister Nirmala Sitharaman last month under the 'Aatmanirbhar Bharat'economic package.

The government contribution to the distressed asset fund is Rs 4,000 crore through its investment in the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) set up by it along with Sidbi. The CGTMSE, in turn, provides partial credit guarantee to banks.

Functioning MSMEs, which have become non-performing assets or are stressed, will be eligible for access to the fund.

Under the scheme, the Centre will provide guarantee coverage of up to 85 per cent for loans up to Rs 5 lakh and 75 per cent for loans beyond Rs 5 lakh to MSMEs from financial institutions.

It provides a debt facility of up to 15 per cent of promoter contribution or Rs 75 lakh to the promoters, who, in turn, will infuse the amount in the MSME unit as equity.

According to the government, around 2 lakh MSMEs will be benefited by the move.

Further, the Union Cabinet on Monday also approved the Rs 50,000 crore fund of fund for MSMEs which would help these entities to get equity.

The fund of funds will be set up with a corpus of Rs 10,000 crore and provide equity funding for MSMEs. It will be operated through a Mother Fund and a few daughter funds and its structure will help leverage Rs 50,000 crore of funds at daughter funds level.

It will also help MSMEs to get listed on the main board of stock exchanges.

Meanwhile, the GDP data showed India is undergoing the slowest pace of growth in 11 years. Around 12 crore people lost jobs in April, as per the estimates by the Center for Monitoring Indian Economy.

CCEA clears 50-83% MSP hike for 14 Kharif crops

The Cabinet Committee on Economic Affairs (CCEA) approved 50-83 per cent rise in the minimum support price (MSP) of 14 kharif crops for the 2020-21 marketing season.

The highest MSP rise was proposed for nigerseed (Rs 755 per quintal), followed by sesamum (Rs 370 per quintal), urad (Rs 300 per quintal) and long staple cotton (Rs 275 per quintal), said Union Minister of Agriculture and Farmers Welfare Narendra Singh Tomar.

The differential remuneration was aimed at encouraging crop diversification, he added.

(With agency inputs)