Key Takeaways from the Cabinet Meet in Which “Historic Decisions” Were Taken

Politics

Key Takeaways from the Cabinet Meet in Which “Historic Decisions” Were Taken

Illustration: Arati Gujar

As India began a phased unlocking of the economy, Prime Minister Narendra Modi chaired a cabinet meeting in which “historic decisions” relating to the (Micro, Small and Medium Enterprises) sector and agriculture were expected to be taken. It approved a ₹20,000-crore package for distressed MSMEs and ₹50,000 crore equity infusion through fund of funds.

“Gaon, gareeb, kisan (villages, the poor, and the farmers) are the priority of the government,” a panel of Union ministers told the media after the meeting.

Union Minister Nitin Gadkari pointed out that MSMEs account for 29 per cent of the GDP, 48 per cent of the total exports from India are dependent on 6 crore MSMEs, and MSMEs also provide more than 11 crore jobs.

The cabinet approved changes to the definition of MSMEs. According to the new definitions, MSMEs with an investment of ₹1 cr and turnover of ₹5 cr will be classified as micro-units. Units with an investment of ₹10 cr and turnover of ₹50 cr will be classified as small units while those with an investment of ₹50 cr and turnover of ₹250 cr will be classified as medium units.

The cabinet approved a ₹20,000 crore package for stressed MSMEs and ₹50,000 crore infusion equity infusion through Fund of Funds. “The MSMEs which are exporting and have a good turnover will be provided money from a government fund of ₹10,000 crore, which will be increased to ₹50,000 crore. The units which have a good turnover and GST, will be listed and the government will buy shares in the company which will be a revolving fund and this will benefit the MSMEs entering the stock market,” he said.

Along with the MSME sectors, farmers have also been sharply hit by the pandemic. After Nitin Gadkar, it was upon the Minister of Agriculture Narendra Singh Tomar to take over and make announcements relating to the agriculture sector. The cabinet raised the minimum support prices for 14 crops and the rates were specified by the minister.

“Minimum support prices (MSP) for 14 kharif crops increased by 50- 83%, to provide relief to the farmers,” Tomar said. Despite the coronavirus pandemic and the lockdown, he pointed out that procurement of wheat and paddy had gone up from last year.

Tomar also announced that farmers would get more time, upto August to pay their loans. “Farmers get loans at an interest rate of seven per cent and if they pay it off on time, they further get a subsidy of seven per cent,” he announced.

This was the first cabinet meeting of the second year of the Modi government and more announcements are expected in the coming days, as the country tries to get its economic engine back on track as Unlock 1.0 gets underway.

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