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Cabinet approvals on May 20, 2020

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Cabinet approvals May 20The Union Cabinet headed by Prime Minister Narendra Modi has given its approval to the following on May 20, 2020:

–Cabinet relaxes the existing “Partial Credit Guarantee Scheme (PCGS)”; timeline extended till March 31, 2021

The Union cabinet has relaxed the norms of the Partial Credit Guarantee Scheme (PCGS) worth Rs 45000 crore and extended its time period from June 30, 2020 to March 31, 2021 for purchase of pooled assets of the distressed entities.

  • This relaxation has been provided to widen the coverage to include a larger number of Non-Banking Financial Companies (NBFCs), housing finance companies (HFCs) and micro finance institutions (MFIs) under PCGS.
  • In this regard, Sovereign guarantee of up to 20% of first loss will be provided to state-owned banks for purchase of bonds or commercial papers of NBFCs, MFIs and housing finance companies (HFCs) having a credit rating of AA or below, including unrated paper with original maturity of up to one year.

Eligibility for modified PCGS:

-NBFCs/HFCs which have reported under Special Mention Account (SMA-1) category on technical reasons alone during the last one year period prior to August 1, 2018 will be eligible for benefit under the scheme. Earlier NBFCs/HFCs reported as SMA-1 or SMA-2 during the specified period were ineligible.

-Entities which have made net profit in at least one of the three financial years of 2017-18, 2018-19 and 2019-20 will be eligible. Earlier, entities which made a net profit in 2017-18 or 2018-19 were only eligible.

Static Points

-Introduced in December 2019, PCGS scheme allows state run banks to purchase high-rated pooled assets from financially sound NBFCs and HFCs.

-The SMA-1 refers to those accounts where the principal or interest payment remains overdue between 31-60 days, while SMA-2 pertains to those where the overdue period is between 61-90 days.

–Cabinet approves Rs 10,000 cr “Scheme for formalisation of Micro Food Processing Enterprises (FME)”

Centre has approved the “Scheme for Formalisation of Micro food processing Enterprises (FME)” for the Unorganized Sector on all India basis with an outlay of Rs 10,000 crore. The expenditure will be shared by GOI and the States in a ratio of 60:40.

It will be implemented over a 5 year period from 2020-21 to 2024-25 on the basis of Cluster approach.

  • The scheme aims to increase access to finance by micro food processing units with special focus on women entrepreneurs and Aspirational districts. It also lays focus on minor forest produce in Tribal Districts.


-Micro enterprises will get a credit linked subsidy of 35% of the eligible project cost with a ceiling of Rs 10 lakh. Beneficiary contribution will be minimum 10% and balance from loan.

-Seed capital of Rs 4 lakh per SHG will be given for loan to members for working capital and small tools.

-Grant will be provided to food processing organizations (FPOs) for backward/forward linkages, common infrastructure, packaging, marketing & branding.

–Cabinet approves extension of ‘Pradhan Mantri Vaya Vandana Yojana till 2023

Union Cabinet has approved the extension of the Pradhan Mantri Vaya Vandana Yojana (PMVVY) for further 3 years till March 31, 2023 from March 31, 2020.

  • The assured rate of return for fiscal 2020-21 has been pegged at 7.4% per annum. Earlier, the scheme offered an assured return of 8%.
  • The expected financial liability will range from an estimated expenditure of Rs 829 crore in 2023-24 fiscal to Rs 264 crore in last FY 2032-33.

What is Pradhan Mantri Vaya Vandana Yojana?

PMVVY scheme, implemented through the Life Insurance Corporation (LIC), gives a guaranteed payout of pension at a specified rate for 10 years to senior citizens (60 years and above) based on an assured return on the purchase price or subscription amount. It also offers a death benefit in the form of return of purchase price to the nominee.

–Cabinet approves Rs 20,050 cr Pradhan Mantri Matsya Sampada Yojana

Centre has given its approval to implement the Pradhan Mantri Matsya Sampada Yojana (PMMSY) to bring a blue revolution through sustainable and responsible development of fisheries.

  • Outlay: The total estimated investment for the scheme is Rs 20,050 crore, comprising the central government’s share of Rs 9,407 crore, state’s share of Rs 4,880 crore and beneficiaries’ share of Rs 5,763 crore.
  • Time Period: The scheme will be implemented during FY 2020-21 to FY 2024-25.
  • Components: The scheme comprises of two components — Central Sector Scheme and Centrally Sponsored Scheme. Under the Central Sector Scheme Component an amount of 1720 crores has been earmarked while under the Centrally Sponsored Scheme (CSS) Component, an investment of Rs. 18330 crores allocated.

About PMMSY:

The PMMSY was one of the programmes announced by finance minister Nirmala Sitharaman as part of the Modi government’s ₹20 trillion stimulus package last week to restart the economy after a stringent lockdown was announced on 25 March.

Fisheries sector growth:

-The Gross Value Added (GVA) of fisheries sector in the national economy during 2018-19 stood at Rs 2,12,915 crores (current basic prices) which constituted 1.24% of the total National GVA and 7.28% share of Agricultural GVA.

-Fisheries sector in India grew with an average annual growth rate of 10.88% during the year from 2014-15 to 2018-19.

-The export of marine products stood at 13.93 lakh metric tons and valued at Rs.46,589 crores (USD 6.73 billion) during 2018-19.

Targets to enhance Fisheries sector:

-Enhancing fish production from 137.58 lakh metric tons (2018-19) to 220 lakh metric tons by 2024-25.

-Sustained average annual growth of about 9% in fish production

-An increase in the contribution of GVA of fisheries sector to the Agriculture GVA from 7.28% in 2018-19 to about 9% by 2024-25.

-Double export earnings from Rs.46,589 crores (2018-19) to about Rs.1,00,000 crores by 2024-25.

-Enhancing productivity in aquaculture from the present national average of 3 tonnes to about 5 tonnes per hectare.

-Reduction of post-harvest losses from the reported 20-25% to about 10%.

-Enhancement of the domestic fish consumption from about 5-6 kg to about 12 kg per capita.

-Generate about 55 lakhs direct and indirect employment opportunities in the fisheries sector along the supply and value chain.

–Cabinet approves Atma Nirbhar Bharat Package for allocation of foodgrains to the migrants / stranded migrants

The Union Cabinet has given its ex-post facto approval to provide free foodgrains for two months to 8 crore migrants / stranded migrants @ 5 kg per person per month (May and June, 2020). It was announced in AtmaNirbhar Bharat Package.

  • The total subsidy from the Government of India is estimated at about 3,109.52 crore including food subsidy of about Rs.2,982.27 crore and  intra-state transportation and handling charges and dealer’s margin / additional dealer margin will account for about 127.25 crore.

–Cabinet approves Rs 30,000 cr Special Liquidity Scheme for NBFCs/HFCs to address their Liquidity Stress

A Special Liquidity Scheme for NBFCs and HFCs was announced in AtmaNirbhar Bharat Package by the Ministry of Finance has received a Union Cabinet post facto approval. The outlay of the scheme is Rs 30,000 crore and will be administered by the Department of Financial Services, Ministry of Finance.

  • Also a Special Purpose Vehicle (SPV) would be set up to manage a Stressed Asset Fund (SAF) whose special securities would be guaranteed by the Government of India and purchased by the Reserve Bank of India (RBI) only.


The proposal of special liquidity scheme was mooted in Budget Speech of 2020-21 to benefit the real economy by augmenting the lending resources of NBFCs/HFCs/MFls. Now, there is an urgency to implement the above Budget announcement to strengthen financial stability on account of the emerging situation of Covid-19.

–Cabinet approves additional funding of up to Rupees 3 lakh crore through introduction of Emergency Credit Line Guarantee Scheme (ECLGS)

The Union Cabinet approved the additional funding of up to Rs 3 lakh crore,   collateral-free loan support at a concessional rate of 9.25% through the Emergency Credit Line Guarantee Scheme (ECLGS) for the Micro, Small & Medium Enterprises (MSME) sector, which has adversely impacted by COVID-19.

  • This scheme was announced in the Rs 21 lakh crore comprehensive package.
  • Under this, the lenders including banks, financial institutions and NBFCs, will be provided with complete guarantee cover by the National Credit Guarantee Trustee Company Limited (NCGTC) for giving loans to MSMEs in the form of a Guaranteed Emergency Credit Line (GECL) facility.

What is ECLGS?

It provides 100% guarantee coverage by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested MUDRA borrowers, in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore shall be provided by the Government of India spread over the current and the next three financial years.

  • Eligibility: MSMEs with outstanding credit of up to Rs 25 crore as on February 29, 2020, and with an annual turnover of up to Rs 100 crore would be eligible for GECL funding.
  • Loan tenor: 4 years
  • Moratorium period: One year on the principal amount
  • Interest rate: Capped at 9.25% for banks and financial institutions and at 14% for NBFCs on loans given under the scheme.

Cabinet approves issuance of the Jammu & Kashmir Reorganisation (Adaptation of State Laws) Second Order, 2020 in relation of Jammu & Kashmir Civil Services (Decentralisation and Recruitment) Act

The Union Cabinet has given its ex post facto approval for the Jammu & Kashmir (Adaptation of State Laws) Second Order, 2020 issued under section 96 of Jammu & Kashmir Reorganisation Act, 2019.

  • This order has further modified the applicability of domicile conditions to all levels of jobs in the Union Territory of Jammu & Kashmir under the Jammu & Kashmir Civil Services (Decentralisation and Recruitment) Act (Act No. XVI of 2010).

–Cabinet approves waiver of interest of Hindustan Organic Chemicals Limited

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Shri Narendra Modi, has given its ex-post facto approval for waiver of interest of Rs.7.59 crore on Government of India loans of Hindustan Organic Chemicals Limited (HOCL), as on 31st March, 2005 in addition to the ‘Waiver of penal interest and interest on interest up to 31st March, 2005’ that was earlier approved by the CCEA in March, 2006 under the rehabilitation package for HOCL.

  • The ex-post facto approval will also enable HOCL to settle the pending CAG audit observation in the matter.

–Cabinet approves adoption of methodology for auction of coal and lignite mines/blocks for sale of coal / lignite on revenue sharing basis and tenure of coking coal linkage

The CCEA “has approved the methodology for auction of coal and lignite mines/blocks for sale of coal/lignite on revenue sharing basis and increasing the tenure of coking coal linkage.

  • During the Rs 21 lakh crore comprehensive package detailing, it was announced coal mines would be auctioned to the private sector for commercial mining to end reliance on imports and improve local production.

Bid Parameters:

  • The bid parameter will be revenue shared, as bidders would be required to bid for a percentage share of revenue payable to the government.
  • The floor price shall be 4% of the revenue share. Bids would be accepted in multiples of 0.5% of the revenue share till the
  • Percentage of revenue share is up to 10% and thereafter bids would be accepted in multiples of 0.25% of the revenue share.