MSMES REDEFINED TO BUILD THE ATMA-NIRBHAR BHARAT
The package was of value INR 20 lakh crore and as the PM mentioned in his address, this package makes approximately 10% of the GDP
The economic relief package announced by the Hon’ble Prime Minister, Narendra Modi in his LIVE address to the nation at 8 pm on Tuesday, 12 May 2020 was for the Atma Nirbhar Bharat Abhiyaan, which translates as Self-Reliant India Mission. The package was of value INR 20 lakh crore and as the PM mentioned in his address, this package makes approximately 10% of the GDP.
As PM Modi said, the package will empower different sectors of the Indian society, as much as it will help the pillars of the Indian economy to rise after the lockdown ends. He alliterates saying “Rs. 20 lakhs crores in 2020”. The package includes land, labour, liquidity and laws who will all be beneficiaries of the package.
The package is especially meant to support and promote the cottage industries, household industries, small, medium and micro enterprises, the MSMEs which are the source of livelihood for crores of Indian people.
The MSMEs form the basis of the Atma Nirbhar Bharat Mission that the government aims to achieve. The economic package will bestow advantages on those daily wage earners who work in the MSMEs, and build a self-reliant nation for the privileged Indians to take pride in.
These are indeed true citizens of the country, who contribute to the progress of not just their own individual dreams, but for the overall progress of the nation, working tirelessly.
On Wednesday, 13 May 2020, the Finance Minister, Nirmala Sitharaman made an important announcement regarding the details of the relief package announced by the PM on Tuesday.
The MSMEs were redefined by the Finance Minister in her announcement on Wednesday at 4 pm. The MSMEs are categorised as small, medium and micro enterprises based on the investment capital.
As defined by the MSMED Act of 2006, the MSMEs were divided into two categories: Manufacturing and Service Enterprises and the investment criteria was as follows:
< Rs. 25,00,000
< Rs. 5,00,00,000
< Rs. 10,00,00,000
< Rs. 10,00,000
< Rs. 2,00,00,000
< Rs. 5,00,00,000
A manufacturing enterprise requires the use of machines and technology while the service enterprise requires no equipment or machinery which makes the capital less.
However, the finance minister, in her statement said that the low threshold of the investment could be the reason why entrepreneurs might be fearing that they will “graduate out of benefits” and could be “killing the urge to grow” in them.
From now on, companies with assets up to Rs 1 crore and revenue up to Rs 5 crore would be called micro-enterprises. In the same manner, enterprises with expenditure up to Rs 10 crore and turnover up to Rs 50 crore would be classified as small enterprises and enterprises with expenditure up to Rs 20 crore and turnover up to Rs 100 crore will be regarded as medium-sized enterprises.
We can represent this in tabular form for clarity:
Manufacturing & Service Enterprises
Investment < Rs. 1 crore
Turnover < Rs. 5 crores
Investment < than Rs. 10 crores
Turnover < Rs. 50 crores
Investment < Rs. 20 crores
Turnover < Rs. 100 crores
The revised MSME classification is such that it will be treating both manufacturing and service types of enterprises under one single head. Also, the classification will be done not only on the basis of the investment but also on the basis of the turnover, according to the amounts as mentioned above.
Other important announcements made with regard to the MSMEs are as follows:
- Rs 3 lakh crore collateral-free guaranteed loans for companies, particularly small and medium-sized enterprises, have been declared by the Centre. Under this program, lenders with up to Rs 25 crore pending and Rs 100 crore are eligible.
- Also, Rs 20,000 crore subordinated debt to the under-stressed MYME has been declared.
- Rs 50,000 equity infusions for small to medium-sized companies via the Fund were revealed on Wednesday. The Corpus Fund of Rs 10,000 Crore will be set up immediately, said Finance Minister Nirmala Sitharaman.
- Lastly, global tenders would be refused after Rs 200 cr. MSME receipts from the Government and CPSEs would indeed be published within 45 days.
- Companies want to benefit from being registered as MSMEs so that they get tax rebates, cheaper bank loans, preferences for license and registration as well as exclusive government tenders.
The MSME sector generate 45% of India’s total employment, 50% of the total exports, 95% of all industrial units and they are producers/manufacturers of more than 6000 types of products.
Looking at the statistics, one can be reassured that MSMEs have played an enormous part in boosting the economy of the country always. With the lockdown in effect due to COVID-19, they have also been the sufferers.
Nevertheless, the silver lining is seen with the new relief package the government has announced. It is hoped that the MSMEs get the aid and encouragement they require, and they form the pivot of the Atma Nirbhar, the self-reliant India.