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Cabinet approvals on July 8, 2020

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Cabinet approvals May 20The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval to the following proposals on July 8, 2020:

–Cabinet approved Rs. 1 Lakh cr financing facility under ‘Agriculture Infrastructure Fund’

As a part of the Rs 20 lakh crore “Atmanirbhar Bharat Abhiyan” announced in response to the COVID-19 crisis, the Union Cabinet has given its approval to a 10 years long (FY2020 to FY2029) pan India Central Sector Scheme namely “Agriculture Infrastructure Fund” with an outlay of Rs. 1 Lakh Crore in order to support agri-entrepreneurs, start-ups, agri-tech players and farmer groups for infrastructure and logistics facilities. Under this, the total outflow as budgetary support from Government of India (GoI) will be Rs.10,736 crore.

  • Rs. 1 Lakh cr will be disbursed in 4 years starting with sanction of Rs. 10,000 crore in the current year and Rs. 30,000 crore each in next three financial years.
  • The Moratorium for varies between minimum 6 months and maximum of 2 years.
  • The National, State and District level Monitoring Committees will be set up to ensure real-time monitoring of the scheme which will be managed through an online Management Information System (MIS) platform.

Interest subvention of 3% per annum upto Rs 2 cr

All loans under this financing facility will have interest subvention of 3% per annum up to a limit of Rs. 2 crore for a maximum period of 7 years

  • Credit guarantee coverage will be available for eligible borrowers under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs. 2 crore. The fee for this coverage will be paid by the Government. 
  • In case of Farmer Producers Organizations (FPOs) the credit guarantee will be availed from the facility created under FPO promotion scheme of Department of Agriculture, Cooperation & Farmers Welfare (DACFW).

Key Points:

-The loans will be provided by banks and financial institutions as loans to Primary Agricultural Credit Societies (PACS), Marketing Cooperative Societies, FPOs, Self Help Group (SHG), Farmers, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, Aggregation Infrastructure Providers and Central/State agency or Local Body sponsored Public Private Partnership Project

-The objective of the scheme is to provide loans to the above mentioned oganisations for investment in viable projects for post-harvest management Infrastructure and community farming assets through interest subvention and financial support and also to create numerous job opportunities in rural areas.

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Chairman– Mohammad Mustafa
Headquarter– Mumbai, Maharashtra

–Cabinet approved Rs.12,450 crore capital infusion for 3 Public Sector General Insurance Companies – OlCL, NICL & UIICL; their merger halted

The Union Cabinet has approved the capital infusion for an overall value of Rs.12,450 crore; (including Rs. 2,500 crore infused in FY 2019-20) in the three Public Sector General Insurance Companies (PSGICs) namely Oriental Insurance Company Limited (OlCL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL). Of this, Rs.3,475 crore will be released immediately; while the balance Rs,6475 crore will be infused later. 

  • In this regard, the authorized capital of these 3 GICs is also increased to Rs.7,500 crore for NICL, and Rs 5,000 crore for both UIICL and OlCL.

Halt of merger:

The Central Government has also decided to cease the process of merger to make them more stable. Their merger was announced by Late Arun Jaitley in the Budget speech of 2018-19.  The boards of three firms have also approved the merger in January, 2020. However, this process could not be completed due to the poor financial health of these companies. Therefore, capital infusion in these companies has been decided to focus on their solvency and profitable growth.

–Cabinet approved extension of EPF contribution  of 24% for another three months from June to August 2020 under PMGKY

Cabinet approves extension of EPF contribution 24% (12% employees share and 12% employers share) for another 3 months from June to August 2020 under Pradhan Mantri Garib Kalyan Yojana (PMGKY)/Aatmanirbhar Bharat; with total estimated expenditure of Rs.4,860 crore.  This approval is in addition to the existing scheme for the wage months of March to May, 2020 approved on April 15, 2020.  

  • The decision will give further relief to 3.67 lakh small businesses with 72 lakh employees who are facing cash crunch due to ongoing novel coronavirus pandemic.
  • Government will provide Budgetary Support of Rs.4800 crore for the year 2020-21 for this purpose.
  • Notably, the beneficiaries entitled for 12% employers’ contribution for the months of June to August, 2020 under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) will be excluded to prevent overlapping benefit.


The decision to pay both employer and employee contribution was announced in March, 2020 under PMGKY. Under this, the payment will be made for the organisations having up to 100 employees and up to 90% of the employees are drawing wages up to Rs 15,000 per month. The decision was done to ensure that nobody suffers due to loss of continuity in the EPFO contribution.

–Cabinet approves developing of Rs 600 crore Affordable rental housing Complexes for urban migrants / poor

As  a part of the Rs 20 lakh crore economic package to deal with the COVID-19 pandemic, Union Cabinet has given its approval for developing of Affordable Rental Housing Complexes (AHRCs) for urban migrants  / poor as a sub-scheme under Pradhan MantriAwasYojana – Urban (PMAY – U).

The outlay of the scheme is estimated at Rs 600 crore in the form of Technology Innovation Grant and will initially cover three lakh beneficiaries.

  • Beneficiaries: A large part of the workforce in manufacturing industries, service providers in hospitality, health, domestic/commercial establishments, and construction or other sectors, labourers, students etc. who come from rural areas or small towns seeking better opportunities will be targeted under ARHCs.

Approach of ARHC

ARHCs will have a two-pronged approach;

  • Firstly, Vacant government housing complexes will be converted into ARHCs under a concession agreement for 25 years. Then, complexes will revert to urban local bodies (ULB) after 25 years to restart the next cycle like earlier or run on their own.
  • Secondly, special incentives like use permission, 50% additional Floor Area Ratio or Floor Space Index, concessional loans at priority sector lending rates and tax reliefs, to companies to develop ARHCs on their own vacant land for 25 years, offered by the government.


Ministry of Housing & Urban Affairs (MoHUA) has initiated an Affordable Rental Housing Complexes (ARHCs) for urban migrants/poor as a sub-scheme under PMAY – U. The scheme was announced by the Finance Minister Nirmala Sitharaman on 14 May, 2020 under AtmaNirbhar Bharat Abhiyan.

–Cabinet approved 3 months extension of “Pradhan Mantri Garib Kalyan Yojana- Ujjwala” for beneficiaries w.e.f. 01.07.2020

The Cabinet has approved the proposal of Ministry of Petroleum & Natural Gas for extension of time limit by 3 months w.e.f. July 1, 2020 to benefit “Pradhan Mantri Garib Kalyan Yojana (PMGKY)- Ujjwala” beneficiaries till September 30, 2020

  • Notably, the PMGKY package also included relief for poor families who had availed an Liquefied petroleum gas (LPG) connection under Pradhan Mantri Ujjwala Yojana (PMUY).
  • This extension will benefit those PMUY beneficiaries who have been credited with the advance for buying the cylinder, but have not been able to purchase the refill. Thus, the beneficiaries who already have the advance transferred to their account can now take the free refill delivery till 30th September.

Point to be noted:

Under the PMGKY-Ujjwala, the government decided to provide free of cost refills for PMUY consumers for a period of 3 months from April 1, 2020. In this regard, Rs. 9709.86 Cr was transferred directly into the bank accounts of Ujjwala beneficiaries during April- June 2020 and 11.97 Crore cylinders were delivered to the PMUY beneficiaries. 

–Cabinet approves extension of PMGKAY for 5 months; distribution of free of cost Whole Chana from July to November, 2020

The Union Cabinet has approved further extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) as part of Economic Response to COVID-19, for another 5 months from July to November, 2020. The estimated outlay for this extension is Rs.6,849.24 crore covering 19.4 crore households.

  • Under the extension, it is proposed to distribute 9.7 Lakh MT cleaned whole Chana to States/UTs for distribution to all beneficiary households under the National Food Security Act, 2013 (NFSA) @ 1kg per month free of cost from July to November, 2020.
  • In the first phase of the PMGKAY (from April to June 2020), 4.63 lakh MTs of pulses have been distributed already, benefiting 18.2 Cr. households across the country.

Point to be noted:

-The distribution of pulses for the package emanated from robust availability of stock in the buffer which was set up in 2015-2016. The Government of India (GoI) has sufficient stocks of Gram for distribution for the extended period of PMGKAY.

Click the following to read more about PMGKY:

–Cabinet approves extension of PMGKAY for 5 months; distribution of free of cost Grains from July to November, 2020

The Union Cabinet has approved further extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) as part of Economic Response to COVID-19 for additional allocation of food-grains from the Central Pool for another Five months from July to November, 2020.

  • As a part of this extension, additional free-of-cost foodgrains (Rice/Wheat) at the scale of 5 Kg per person per month are being provided to about 81 Crore beneficiaries covered under National Food Security Act, 2013 (NFSA).
  • Notably, Centre on March 30, 2020, had allocated a total of about 120 Lakh Metric Tons (LMT) foodgrains to the States/UTs to be distributed-for three months (April-June, 2020). Click Here for Full Distribution 

Click the following to read more about PMGKY: