- Government may pay three-month salaries of employees, sources said
- Centre also plans to guarantee up to Rs 3 lakh crore of loans to MSMEs
- The government may also pay the employees' share of provident fund
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Sources said the April-June wages of employees of MSMEs may be paid from the Employee State Insurance Corporation.
The employee insurance funding or ESIC is a self-financing health insurance scheme under the government that is mandatory for employees earning up to Rs 21,000 rupees a month. The ESIC funds, which have Rs 31,000 crore at present, offer compensation in the form of cash up to three months of unemployment.
The government may also pay the employees' share of provident fund for those in the MSME sector who draw up to Rs 30,000 a month. The limit is currently Rs 15,000. This will cost the government an additional Rs 5,000 crore, say officials.
A one-year moratorium on loan repayment for MSMEs may also be one of the proposals being considered.
Small firms may be eligible to borrow an additional 20% of their credit limit, sources said.
The government may also help small and medium industries in loans by paying a share of the interest or having the loan restructured.
Small businesses have been the worst hit by the lockdown with their activity coming to a halt. Some 10 crore workers in mining, construction, manufacturing and services sectors have been left jobless due to the lockdown, according to various reports.
Hundreds of thousands of cash-starved small businesses have either deferred or cut their workers' wages this month, say industrialists and union leaders. The All India Manufacturers Organisation (AIMO)- an industry body representing some 100,000 small manufacturers - said last month that more than two-thirds of its members faced problems in paying salaries.
Several states had written to the government to allow the use of funds collected under the employee state insurance funds to cover wages or at least a part of it for the lockdown period.
MSMSe are small and medium-sized businesses with investment in equipment not exceeding Rs 10 crores. Small businesses account for nearly a quarter of India's $2.9 trillion economy and employ more than 50 crore workers, according to government estimates.