Working on Rs 1 trn fund for MSMEs to provide liquidity: Nitin Gadkari

Move may see Govt tap into Rs. 80,000 crore worth of ESIC funds

The government may soon set up a Rs 1 trillion revolving fund for micro, small and medium enterprises (MSMEs) to bring in much-needed liquidity for small businesses if the Prime Minister’s Office accepts the proposal, MSME Minister Nitin Gadkari (pictured) said  on Friday.
 

A day after he first mentioned the ambitious scheme, Gadkari on Friday fleshed out his plan at a webinar with industry body Assocham. While the minister remained mum on the details, he revealed that it involves using funds lying idle with the Employees’ State Insurance Corporation (ESIC) to help small businesses on an emergency footing. It will push in liquidity through bank guarantees for MSMEs which have borne the brunt of the ongoing coronavirus crisis.
 

Gadkari said he has asked Labour Minister Santosh Gangwar to make use of a major chunk of funds to the tune of Rs 80,000 crore lying idle with the Employees' State Insurance Corporation (ESIC). But the proposal will have to be examined by the Finance Ministry and the Prime Minister's Office (PMO), he said.

“We have decided to set up a fund of Rs 1 trillion and we will insure it and its insurance will be paid by government. We will fix a formula among (the stakeholders) and provide minimum Rs 1 trillion and the interest on the same,” said Gadkari.

The minister added the government would provide a guarantee for the fund which would be mobile and keep revolving. Sources say the move was pushed by the MSME Ministry after it was swamped with reports of MSMEs across the country struggling to pay monthly wages to the labour that have managed to turn up to factories once the lockdown has been partially relaxed for industry.
 

On the stinging issue of pending dues for MSMEs, Gadkari again promised to look into the matter. Earlier this month, Gadkari had stated during a ministry meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest. He estimated that Rs 40,000-50,000 crore could be injected into the market by releasing the due payments, sources said. The MSME Ministry is also planning a separate scheme for according credit rating to MSMEs based on their turnover, exports, and GST payments.
 

However officials have ruled out a specific scheme for exporters. Many small exporters had requested the industry to take up their cause after not getting a response from the Commerce Department. Saddled with weak domestic demand and intense competition from major international rivals, MSME exporters have sought extension of pre and post-shipment credit tenure, interest-free loan to cover forward losses and enhancement of export benefits.

Gadkari also said he would be suggesting to the Finance Minister that refunds for the Goods and Services Tax and Income Tax are fast tracked and cleared within eight working days.
 

On Friday, the minister also said the National Highways Authority of India would be speeding up and catalysing investment into the road sector.
 

A proposal is being mooted to plan industrial clusters along the new Delhi-Mumbai Expressway under implementation. ''We have moved a proposal for Cabinet that we will acquire land on the sides of the highway. I am telling all our leather clusters that land and labour costs are cheap, we will provide railway, port and power connectivity. We can also bring the companies moving out of China and bring them to India and settle them in this corridor," he said.