This Article is From May 13, 2020

What MSMEs May Get Including Wages For Workers: 10 Points

The government is also believed to be considering a one-year moratorium on loan repayment for MSMEs or Micro, Small and Medium Enterprises

Every registered MSME may be eligible for 20 per cent extra loan, sources say.


  • 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
New Delhi: The government may pay three-month salaries of employees of small and medium businesses hit by coronavirus and weeks of lockdown, sources said on Wednesday. It also plans to guarantee up to Rs 3 lakh crore of loans to MSMEs or Micro, Small and Medium Enterprises to help them tide over the virus crisis. On Tuesday, PM Modi announced Rs 20 lakh crore - equivalent to 10 per cent of India's GDP -- in fiscal and monetary measures to restart an economy battered by the 50-day shutdown of industries and other economic activities to ensure social distancing and prevent the spread of COVID-19. Finance Minister Nirmala Sitharaman will address the media at 4 pm today to share details of the massive package.

Here are the top 10 updates on this big story:

  1. Sources said the April-June wages of employees of MSMEs may be paid from the Employee State Insurance Corporation.

  2. 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.

  3. 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.

  4. A one-year moratorium on loan repayment for MSMEs may also be one of the proposals being considered.

  5. Small firms may be eligible to borrow an additional 20% of their credit limit, sources said.

  6. The government may also help small and medium industries in loans by paying a share of the interest or having the loan restructured.

  7. 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.

  8. 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.

  9. 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.

  10. 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.