Finance Ministry has approved Fund of Funds of Rs 10,000 crore; It will be used in buying equities of triple rated MSMEs: Nitin Gadkari
In many discussions, the MSME entrepreneurs have demanded this from me. And we have done two things after thinking about the same (i) I had a talk with Mr Santosh Gangwar and informed him that everyone is not getting the benefit of the funds of Rs 15,000 crore that was put by the government and almost 80-90% people are out from its purview.
Nitin Gadkari, Union Minister of Road Transport & Highways, Micro, Small & Medium Enterprises, talks about the steps that will be taken to encourage the MSME sector amid COVID-19 pandemic, fund of funds scheme, lockdown, plans to increase investment in infrastructure sector among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: How are you health-wise as we were informed that you are not keeping well at present?
A: My health is good and I am perfect. It was a one-day problem, rest is fine and there is no need to worry. I am in Nagpur, where I start my work every day at 11 am, which continues till 7 pm or 7:30 pm. I have communicated with around 1.50 crore people in the last 20 days including interaction with scholars from 50 Universities of the world yesterday. Besides, I have been in continuous touch with the small scale organization related to MSME, like FICCI, ASSOCHAM and CII, as well as plastic association and leather association and, have collected their suggestions. These suggestions were verified at the department level and then sent a report to the finance ministry and the Prime Minister. Some decisions have been taken at the government, the Reserve Bank of India, banks and our ministry and I expect that some relief will be announced soon but would like to talk about it only after it is cleared at the Prime Minister level.
Q: There are talks that a package of around Rs 1 lakh crore is set to be announced for the MSME sector. Would you like to assure small businessmen on this, who are sitting in a hope that the government would make a provision to take the sector out from the problems that it is facing amid COVID-19?
A: First of all, there is a need to understand the decisions that have been taken. The first thing is that the Reserve Bank of India has increased the working capital of entrepreneurs by 20 per cent. It is available in many places. The second important thing is a moratorium of 3 months has been granted on housing, car and industry loans. The third this is that debt scheme of 6 lakh MSMEs has been restructured till March 31, 2020, a period that was fixed for the purpose, earlier. This restructuring date has been extended to December 31, 2020, and I expect that restructuring of debt scheme of around 25 lakh MSMEs will be completed by then.
Apart from this, the ministry of finance has approved the Funds of Funds scheme and now Rs 10,000 crore will be sent to the Cabinet. The fund will be used to support the triple rated MSMEs – that exports – who will launch their equity in the capital market. We will support them by buying 15 per cent equity, which will be offloaded after 4 years after the investment of Rs 10 will turn into Rs 40, we will continue with this rolling fund. Also, when it comes to income tax and GST returns than we in our recommendation has asked the government to fix a period for refunds. The most important thing is related to MSME payments that are stuck at government and government undertakings at central and state levels mainly in major industries and we have sent a drafted scheme for the purpose to the government. In fact, we are studying things closely.
But, there is something important that I would like to tell you that this crisis of Coronavirus is not just a crisis for India but the economic system of the world is facing it. We are supposed to win our fight with Corona first and then the economic war will be fought to win. In this fight, we, the Union government and the state governments, are standing with MSMEs and their stakeholders and will not let anyone shut down their process. There is one more thing that needs to be understood that the state government is also standing in an arena today where there is a shortage of money to pay off the salaries next month. There is a drop in revenue of the central government and the banking system is also going through challenges. And, we have to support and protect everyone and march ahead.
At the same time, I would like to say that we should learn something from what the Prime Minister of Japan has said. He has said those Japanese citizens who have invested in China and have industries there and are willing to come out from the country than they are welcome. For the purpose, he has announced a big package and I think it is a Blessing in Disguise for us. Actually, big countries of the world are willing to come out of China. I do not want to get into political disputes but can say that China is in the process of being a super economic power and India is an alternative/ a competitor for it. So, I think, we should allow the development of such technology, innovation, research, knowledge and skills to attract FDI to India as the conversion of knowledge into wealth is the future.
So, this is a time, when good industries should form joint ventures with our MSMEs. The industry should come here through foreign investment and for that the central and state government should give a red carpet treatment to those industries and immediate clearances should be provided to them. Exports should be increased on the same pretext as it will help in strengthening our economy, which in return create employment opportunities and reduce poverty in India. At the same time, we should also come up with a policy that seeks to reduce imports. If exports are increased after imports are reduced then it will help us in growing, which will increase the employment potential of India.
Besides, we have also done good work and have divided the MSME sector into two, Agriculture MSME and other MSME. We have 115 aspirant districts, where agricultural, tribal and rural areas are located. These are the 115 districts where we will concentrate more. We are making highways and have plans to double the speed from 30km/day to 60km/day. In the process, we are developing Delhi-Mumbai express highway along with 22 green highways and have started working on them. This is a Rs 1 lakh crore project and have plans to develop industrial clusters on both side of the road with the help of NHAI and sent this proposal to the Cabinet for approval. We will be developing leather cluster, chemical cluster and plastic cluster after the plan is approved. Apart from this, we will be developing smart villages in the process, which will be connected with airports, railway stations and ports. The land rates are quite low in these regions and we have acquired lands for the purpose while developing the highways. This is a Rs 1 lakh crore highway project and we have successfully saved around Rs 16,000 crore in land acquisition. I think one can get an acre of land at a rate of Rs 15 lakh to 20 lakh in these regions. They will have facilities of water, power, transport and communication and they will be developed into smart cities. So, the economic corridor and the highway will see huge investments and there will be a dissimilation of wealth and investment. These highways will cross through the tribal and backward area of Rajasthan, Haryana, Maharashtra, Gujarat and Madhya Pradesh. So, we have planned things in a way that new job opportunities are created. It will help us in being a super economic power and meet Prime Minister Narendra Modi’s dream of being a $5 trillion economy along with a Rs 100 lakh crore infrastructure.
Q: The ongoing problem is challenging and unprecedented as we don’t know that the problem will come to an end in recent future and we will be back on track as lockdown is being extended on a regular interval and is being removed in graded form. It is having an impact on the economy. So, let us know about the steps the government is taking to resolve the problem of industry especially the MSME sector?
A: Imposition of the lockdown is appropriate in the fight with corona. At the same time, we have to start the industry and it is being done. The first thing is that our decision has helped in bringing 75-80 per cent traffic on the roads. Our ports and industries have started functioning. Industries, however, have started functioning after being permitted by the district magistrate. It is important to restore employment and bring back those who have migrated. There is no contradiction in providing employment to them but we will have to do five things while doing so to prevent the spread of corona infection. The five things include mandate wearing a mask, sanitizer should be used at regular interval mainly while coming and going and must abide by the rule of maintaining the one-meter distance between two people. The other two important things that should be done at the industry level are (i) to be worried about food and shelter labour and make sure that they are not infected with corona and (ii) if bus services are provided then make sure that just 25 passengers are carried in one bus. Apart from this, we have started several works in Maharashtra like road construction and I think it will provide employment opportunities. Practically, it is not possible to pay people by making them sit at the home and I think the process has started.
On the other hand, we are supposed to prevent the spread of corona infection by making sure that the rules are not violated. Maintaining a balance between the two will give a path to us and the government is working on it.
Q: Do you think that MSMEs can get relief from funds of up to Rs 80,000 crore that is available in Employees' State Insurance Corporation (ESIC)?
A: In many discussions, the MSME entrepreneurs have demanded this from me. And we have done two things after thinking about the same (i) I had a talk with Mr Santosh Gangwar and informed him that everyone is not getting the benefit of the funds of Rs 15,000 crore that was put by the government and almost 80-90% people are out from its purview. So, there is a need to improve it and he has sent a recommendation in relation to it and any decision in this regard will be done at the Finance Ministry and Prime Minister level. (ii) We have also sent a few suggestions about the fund to the Prime Minister and the Finance Minister and I don’t think that it is not an appropriate place to talk about it. Any decision in this regard will be taken at these two levels. Of course, the government is trying to do whatsoever is best for the industry and the workers and I believe that a relief will be granted from the highest level.
Q: You have informed about Rs 10,000 crore is being allocated that will be used in buying equities of MSMEs with good credit rating. Is it a part of the Rs 1 lakh crore proposal, if yes, then how it will benefit the companies?
A: Possibly you remember that the Reserve Bank of India had appointed an expert committee on MSME under the chairmanship of UK Sinha. The committee in its report recommended the formation of a government-sponsored Fund of Funds of Rs 10,000 crore to support venture capital and private equity firms investing in MSMEs. For instance, major industries have excelled due to the capital market and we have decided that the MSMEs that are export-oriented and are triple rated and have records of GST and bank performance should go to the capital market instead of the banks. The common man will buy their shares when they will go into the capital market. I went to NSE and found that they did the same at Rs 7,000 crore, which was successful and this is something that inspired us to bring this scheme. So, this fund of Rs 10,000 crore will be used in buying the shares of the MSMEs, i.e., if an organization enters the capital market to raise Rs 50 crore than we will buy equities of Rs 7.5 crore of the same on behalf of the government of India. These shares will be offloaded in four years if it is priced at Rs 60 from Rs 10. Then, the additional Rs 50 will be added to the fund and we will find ways to invest it. This is a rolling fund and we want to turn this fund into a fund of Rs 1 lakh crore, which will encourage good MSMEs that are export-oriented and have a record of GST and income tax of 3-4 years and have a good bank turnover. It will also reduce the pressure on the banks. This will also help us in going ahead and allow them to raise funds from the capital market. We have started working on it and the finance ministry has approved the proposal and now it will be sent to the cabinet, if approved, it will benefit the MSME sector.
Q: You have said that the transport work has started and 75-80% of traffic has returned on the roads. But trucks carrying essential items that are plying on the highways say that they are facing certain issues. In fact, their association has also written a letter to you that they are facing problems in getting passes and driver insurance. So, can we expect that financial reform can be introduced to the transport sector?
A: I have spoken to the transport ministers of the country. It is true that certain obstacles are available at certain points, where trucks are supposed to stop and there is an absence of motel (Dhabas) as well as puncture shops. So, the state governments have displayed their interest in it and have issued a helpline number. Apart from this, I have also asked our department to introduce a helpline number across the nation. Thus, these obstacles and bottlenecks will be cleared and things will smoothen in next 3-5 days, which will help in starting the transport and the transportation of essential commodities are on till date.
Q: Global experts have a belief that this lockdown is the best opportunity to complete the stuck projects. Do you think that these road-building projects can be completed by maintaining a social distancing?
A: It is a general concept that calls for maximum capital expenditure in the infrastructure when the economy is hit. It will give a boost to the purchasing power, employment potential and growth. Therefore, there is a need to bring big investment in roads, railways, aviation, shipping, ports, inland waterways and power. Even the government will have to increase its budget in the public-private investment. I had a video conferencing with Nirmala Sitharaman on a subject, where I suggested that there is a need to bring liquidity in the market and the country or else the economy will not accelerate. That’s we are trying to launch large scale work and I have directed my department to double or triple the road construction speed – which stood at 30 km/day as on March 31, 2020 – for next two years. But it is facing problems related to financial resources. So at war footing, we will try to create a fund of Rs 1 lakh crore in the next five years by tapping the insurance fund, pension fund, World Bank and ADB along with the toll tax income that stands at Rs 40,000 crore. We are also doing big projects under Bharat Mala project. I know that I talk big but the good thing is that I have turned my words true in the last five years. Besides, we have plans to develop 2000 bus ports through public-private investment, which will create job opportunities. Apart from this, two multi-models are being developed at Varanasi and Nagpur. We are also opening 2000 roadside amenities like petrol pumps, restaurants, hotels, malls and shops. Apart from this, ropeway, cable cars and railway will be developed in hilly areas and for the purpose, we have also tied up for the technology. I have asked the government to permit our ministry to take on these works if permitted, then we will be creating transport facilities in the hilly regions like Arunachal, Meghalaya, Tripura Uttarakhand, Himachal Pradesh and Jammu & Kashmir. We are also engaged in developing e-highways.
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I would be happy to tell that our trial of the last 5-6 years to reduce the country’s import bill by changing the fuel and introduce ethanol, methanol, bio-diesel, bio-CNG and electric options are showing results. Its success stories are coming out in the form of electric buses, electric bikes and electric taxies. Interestingly, electricity is generated in our country and it is import substitute, cost-effective, pollution-free and indigenous. We have also succeeded in flying an aeroplane with bio aviation fuel. I think the import bill will reduce by around Rs 7 lakh crore. It will also reduce pollution level. In fact, the pollution level has gone down during the lockdown. Apart from this, we have plans to double or triple the speed of infrastructure development work for the next two years as it will help us in bringing liquidity in the economy. Availability of liquidity in the system will help in generating employment opportunities and reducing poverty. In the process, we will concentrate majorly on agriculture, tribal and rural and encourage public-private investments for completing the development work.
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