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Cabinet approves key measures announced by FM under Rs 20 lakh cr economic package

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5:14 am IST

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The Union Cabinet met at 7 Lok Kalyan Marg on Wednesday and approved a slew of measures it had announced in the series of press conferences addressed by Finance Minister Nirmala Sitharaman detailing Prime Minister Narendra Modi›s 20 lakh crore economic package. The Cabinet today approved several schemes, among which were: Partial Credit Guarantee Scheme: The Cabinet approved the Sovereign portfolio guarantee scheme of up to 20% loss for purchase of bonds of commercial papers with a rating of AA or below by NBFC, MFI by public sector banks through an extension of the Partial Credit Guarantee scheme.

Covid19 crisis and lockdown restriction are likely to have negative impact on both collection and fresh disbursement besides a deleterious effect on economy. This is anticipated to result not only in asset quality issue for the NBFC/HFC/ MFI sector but also low loan growth as well as higher borrowing costs for the sector, with a cascading effect on MSMEs which borrow from them.

The extension of the existing scheme will address liability-side concerns. Additional funding of up to Rs 3 lakh crore through introduction of emergency credit line guarantee scheme: The Cabinet approved enabling additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested MUDRA borrowers by way of «Emergency Credit Line Guarantee Scheme». Special Liquidity scheme for NBFCs/ HFCs to address their liquidity stress: It was announced in the budget speech of 2020-21 that a mechanism would be devised to provide additional liquidity facility to NBFC/ HFCs over that provided through the Partial credit guarantee scheme.

There is an urgency to implement the above budget announcement to strengthen financial stability on account of the emerging situation of Covid19. Scheme for formalisation of Micro Food Processing Enterprise: The Cabinet approved a new Centrally sponsored scheme for formalisation of micro food processing enterprises for the unorganised sector on all-India basis with an outlay of Rs 10,000 crore. The expenditure will be shared by government of India and the states in the 60:40 ratio.

Aatma Nirbhar Bharat Package for allocation of food grains to migrants/ stranded migrants: The Cabinet today gave its ex-post facto approval for allocation of food grains from Central Pool to approximately 8 crore migrants/stranded migrants at 5 kg per person per month (May and June,2020) for two months free of cost. This would entail an estimated food subsidy of Rs 2,982 crore.

Apart from this, the entire cost of intra-state transportation etc will be borne fully by the Central government taking the subsidy to Rs 3,109 crore. Pradhan Mantri Matsya Sampada Yojana: The Cabinet today approved implementation of PMMSY which is a scheme to bring about Blue Revolution through sustainable and responsible development of Fisheries sector in India under two components namely, Central Sector scheme and Centrally sponsored scheme at a total estimated investment of Rs 20,050 crore comprising of (i) Central share of Rs. 9,407 crore, (ii) State share of Rs. 4,880 crore and (iii) beneficiaries› share of Rs. 5,763 crore.