Kerala announces Rs 5,650cr stimulus package to aid small industries

KN Balagopal
Finance Minister KN Balagopal

The Kerala government might be reluctant to open up the economy the way trade and industry bodies wish but it has come up with a Rs-5650-crore supplementary stimulus package for the worst effected productive sectors: small traders, industry and agriculture. This was announced by finance minister K N Balagopal on Friday.

The package is made up of mostly subsidised loans and interest reliefs, offered either directly by the government or through its financial institutions.

A major component of the package is a 4 percent interest subsidy for loans up to Rs 2 lakh taken from banks. The benefit is for six months from August 1. The relief is expected to profit at least one lakh persons. The subsidy will be given for loans that add up to Rs 2000 crore.

Besides, the government has also decided to write off the rent of commercial space it had leased out for five months from July to December. In addition to this, micro small and medium scale units have been exempted from paying building tax for the five-month period from July to December.

"The State Government will meet up to 4 percent of the interest on loans taken from financial institutions. This will be a huge relief to traders who have found it hard to resume business after months of COVID-induced shutdown," finance minister K N Balagopal said.

The interest subsidy will be given to loans taken from central and state financial istitutions (NABARD, SIDBI, National Housing Bank), state's financial institutions like Kerala Financial Corporation and Kerala State Financial Enterprises, cooperative bodies and commercial banks.

Various reliefs have been announced for schemes under the KSFE and KFC. The penal interest will be waived for all KSFE loan defaults from January 1, 2021, to September 30, 2021.

It has also been decided to extend the KSFE loan scheme for 'COVID-19'-affected families till September 30 this year. Under the scheme, up to Rs one lakh will be be provided at a subsidised interest of 5 percent.

Chitty subscribers, too, have been offered reprieves. Those who have defaulted on installments will get a 50-100 percent waiver on interest till September 30, based on the period of default. The interest and penal interest of KSFE chitty subscribers who have defaulted on their installments from January 20 this year will be waived. Subscribers who have won the bid till September 30 will not lose their dividend.

All KSFE reliefs together will involve an outgo of Rs 300 crore, the finance minister said.

The KFC will introduce three schemes to revive the industry sector. One, Start Up Kerala Project. Under this, loans up to Rs one crore will be disbursed without any collateral. Rs 50 crore has been earmarked for the purpose.

Two, Special package for enterprises in industrial eastates. Under this, loans up to Rs 20 crore will be provided to industrial units functioning in the various industrial estates of Kerala. Rs 500 core has been set apart by the KFC for this.

Three, Second Phase of Chief Minister's Entrepreneur Development Scheme. "The existing scheme will be revised," the finance minister said. Under the revised scheme, loans up to Rs one crore would be provided at 5 percent interest. The minister said the plan was to provide loans to 2500 new units in the next five years at the rate of 500 units a year. The scheme is for entrepreneurs below the age of 50.

The outgo of the KFC packages alone would be Rs 850 crore.

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