MSMEs may get up to Rs 1 lakh crore salary support

As per report by Anandita Singh Mankotia, ET Bureau

NEW DELHI: The government is discussing ways to boost consumer demand in the economy, with one option being the possibility of providing salary support of up to Rs 1 lakh crore over the next three years to MSMEs which employ a certain minimum number of employees, as a way to boost demand in the economy.

“This is one way to boost the demand in the economy which has been suffering,” a senior government official told ET. At present there are close to 6 crore MSME’s in the country and they form the backbone of the economy, the official said.

The official added that a minimum number of employees hired by the unit could serve as selection criteria and the support could be extended for up-to three years.

MSME’s have been at the core of financial package of the Modi government, which in May announced a Rs 3 lakh crore emergency credit line guarantee scheme (ECLGS) under which 100% guarantee coverage will be provided by the National Credit Guarantee Trustee Company for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility.

Last week, the finance ministry said banks had sanctioned loans of about Rs 1.2 lakh crore under ECLGS. However, disbursements against this stood at a little over 61,000 crore till then.