Kerala announces 5,650 crore package to overcome COVID crisis

The Kerala government released a 5,650 crore package to help small traders, industries and farmers hit hard by the COVID 19-induced economic crisis. Finance Minister KN Balagopal announced the package on Friday. additional to the State Legislature.

The main component of the program is a 2,000 crore interest subsidy program for loans from central and state financial institutions, cooperative sector institutions and commercial banks.

Rent, fixed electricity costs eliminated

Under the interest subsidy scheme, the state government will bear up to 4% interest on loans of 2 lakh or less. This advantage will be applicable to loans contracted from August 1 for a period of six months. Mr Balagopal said the program would benefit around a lakh of people. In addition, the rent for public spaces leased to stores has been abolished until December 31. To give MSMEs a break, the government also abolished the construction tax, rent and fixed charge on the connection to electricity for the period from July to December.

Interest on chit fund contributions

Other elements of the special package include programs implemented by Kerala Financial Corporation (KFC) and Kerala State Financial Enterprises Ltd (KSFE), Mr. Balagopal said.

KSFE will waive penalty interest on all overdue loans from January 20, 2021 to September 30. In addition, 50-100% interest and penal interest on chit fund contributions will be waived until September 30. the loan program for families affected by COVID-19 up to 1 lakh at 5% interest has also been extended until September 30.

KFC Schematics

As part of the package, the KFC announced three plans to boost industries. These are in addition to the various programs announced in July, Mr. Balagopal said.

The first is the Startup Kerala program which offers loans up to 1 crore without collateral. KFC will allocate 50 crore to this initiative. The second is a special loan program of 500 crore for units in different industrial zones. Up to 20 crore will be sanctioned for a unit under it.

Loans for industrial units

The third program is the restructured Chief Ministers’ Entrepreneurship Development Program. Loans up to 1 crore at 5% interest will be sanctioned under this scheme. The objective is to grant loans to 2,500 industrial units over the next five years at the rate of 500 units per year.

In June, the KFC announced a one-year moratorium on loan repayments to help MSMEs and healthcare and tourism businesses. The loans would also be restructured in accordance with RBI guidelines. KFC had also designed a scheme for manufacturing units for pandemic control equipment where 90% of the cost of the project would be provided in the form of a loan.