Cabinet approves proposal to give grains to migrants

NEWDELHI: The Union Cabinet, at a meeting chaired by PM Narendra Modi, on Wednesday approved the distribution of free foodgrains to migrant workers, moving to ease the distress of those left stranded in transit by the Covid-19 lockdown imposed on March 25.

The Cabinet also approved a new Special Liquidity Scheme for NBFCs and housing finance companies to improve their liquidity, and an emergency credit line guarantee scheme for MSMEs to borrow an additional ~3 lakh crore.

NEW DELHI: The Union cabinet, at a meeting chaired by PM Narendra Modi, on Wednesday approved the distribution of free foodgrains to migrant workers, moving to ease the distress of those stranded in transit by the nationwide lockdown.

The cabinet also approved a new Special Liquidity Scheme for non-banking financial companies (NBFCs) and housing finance companies (HFCs) to improve their liquidity. It also gave its approval to an emergency credit line guarantee scheme for micro, small and medium enterprises and small entrepreneurs to borrow an additional ₹3 lakh crore.

According to an official statement released after the cabinet meeting, around 80 million migrants would be eligible to receive 5 kg of foodgrains per month for May and June free of cost It would entail an estimated food subsidy of about ₹2,982.27 crore. Expenditure on transport and handling charges and dealer margins will account for about ₹127.25 crore more.

The cabinet approved a finance ministry proposal to launch a new liquidity scheme for NBFCs and HFCs. The direct financial implication for the Government is ₹5 crore, which may be the equity contribution to a special purpose vehicle (SPV). Beyond that, there is no financial implication for the government until an underlying guarantee is invoked. An SPV would be set up to manage a stressed asset fund whose special securities would be guaranteed by the government and purchased by the RBI. The proceeds of the sale of such securities would be used by the SPV to acquire short-term debt of NBFCs/HFCs.

With regard to the scheme for MSMEs and small entrepreneurs, the National Credit Guarantee Trustee Company Limited will offer a 100% guarantee for the loan amount. A corpus of ₹41,600 crore shall be provided by government, spread over the current and the next three financial years.