Coronavirus impact: Nitin Gadkari announces Rs 1 lakh crore fund for MSMEs

Union MSME Minister Nitin Gadkari has announced a financial package of Rs 1 lakh crore for reviving micro, small and medium enterprises (MSMEs) that have been affected due to the coronavirus lockdown. Some micro and small industries had to shut down operations amid the nationwide lockdown as they were unable to pay their workers' salaries.

During an interaction via video conferencing with the representatives of Associated Chambers of Commerce of India (ASSOCHAM) on impact of COVID-19 on MSMEs, Gadkari said that the government is working on a dedicated fund to address delayed payments of MSMEs. "We have prepared a fund of Rs 1 lakh crore and government will pay for the insurance. We will fix a formula on how to coordinate between all 3 stakeholders - the one who has to receive money, the one who has to pay money, and bank," said Gadkari.

MSMEs contribute to 29 per cent of GDP in the country and employs over 11 crore people.

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When most MSMEs are struggling due to a dearth of business and money, Gadkari said their payments pending with major industries, public undertakings, central government and state governments have to be liquidated. The union minister also said that all efforts should be made to make payments immediately and all government departments have been given directions to this end.

As businesses struggle to stay afloat, the Noida Entrepreneur Assosiation (NEA), a body representing over 1.27 lakh MSMEs in Western Uttar Pradesh, has written to government seeking immediate help for their survival. "We have been struggling for months, initially it was bad economic condition and now coronavirus. Business is shut and many had to shut down their industries. We are not in a position to give salaries to workers," said Vipin Malhan, President of NEA.

Noida MSMEs have over 8 lakh workers for which the monthly expenditure is around Rs 1,500 crore in form of salaries.

On the government announcement of Rs 1 lakh crore aid, Malhan said, "We have been hearing about such packages for a long time but till we get it, it's of no use. The crisis is in a phase that even if we survive coronavirus, the loss in business will kill us."