Union government introduces equity infusion for the MSME sector   

New Delhi/ Mumbai: The government has announced extensive measures for the Micro, Small and Medium Enterprises (MSME) sector that provides employment to 11 crore people and holds 21% contribution to the Indian GDP. On Monday, the Union Ministry approved a package worth ₹70,000 crores for the sector. Besides, it also includes equity worth ₹50,000 crores. As per this, the government will invest about 15% equity in the MSME companies that have a good turnover. Moreover, the MSME companies that are bearing loses are also going to be provided capital up to ₹4,000 crores to reinstate stability. Nitin Gadkari, the minister of Micro, Small and Medium Enterprises has declared this to be a historic decision.   


A few days ago, the Union Finance Minister, Nirmala Sitharaman, had announced a financial package worth ₹20,00,000 crores. Accordingly, on Monday, the Union ministry approved the provision in reference to the package. These also include the provisions to change the criteria of MSME sectors. Hence, the changes in the law were then approved. Moreover, two funds were announced for the MSME sector companies, and the decision has also become official.    

The government has prepared a Distress Assessment Fund for the MSME companies. Thus, this will help such companies to emerge out of the losses and regain stability. Besides, the other fund declared by the government for the MSME is known as the Fund of Funds. The capital of this fund is worth ₹50,000 crores. Through this, the government plans to purchase the equity of the companies that have a good turnover. The government has planned to buy maximum 15% equity share of the companies that are doing great. This capital will enable the companies to expand and they will grow stronger. This capital will be rotated across various MSME companies. Hence, this will increase the demand for MSME sector companies in the share market. Furthermore, this the first-ever project of equity being infused with MSME.    

Apart from this, the government has also made provision to grant a loan to the MSME companies up to ₹20,000 crores. This will enable even the smallest of an enterprise to obtain a loan and expand the business. This plan will help the reconstruction of about 25 lakh companies and two lakh new companies can be formed. Furthermore, Union Minister, Nitin Gadkari expressed faith that this will increase employment opportunity in this sector.    

Meanwhile, the Union Ministry has also made a provision to grant loan up to ₹10,000 to hawkers and small-scale traders. Even the vegetable and fruit vendors, cobblers, paanwallahs can obtain a loan to expand their business. This loan will be granted only on 7% interest per annum, and this micro-scale loan plan has been named as the ‘Street Vendor Aatmanirbhar Yojna’.   

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