Regular repayment of loans to be incentivized
Scheme will help small businesses brace the disruption caused due to COVID-19

Union Cabinet chaired by Prime Minister Shri Narendra Modi today approved approved a scheme for interest subvention of 2% for a period of 12 months, to all Shishu loan accounts under Pradhan Mantri Mudra Yojana (PMMY) to eligible borrowers.

The scheme will be extended to loans which meet the following criteria - outstanding as on 31st March, 2020; and not in Non-Performing Asset (NPA) category, as per Reserve Bank of India (RBI) guidelines, on 31st March 2020 and during the period of operation of the Scheme.

The interest subvention would be payable for the months in which the accounts are not in NPA category including for the months that the account becomes a performing asset again, after turning NPA. The scheme will incentivize people who will make regular repayments of loans.

The estimated cost of the Scheme would be approximately Rs. 1,542 crore which would be provided by the Government of India.

Background

This Scheme is for implementation of one of the measures relating to MSMEs, announced under the Atma Nirbhar Bharat Abhiyan. Under PMMY, loans for income generating activities up to Rs. 50,000 are termed as Shishu loans. PMMY loans are extended by Member Lending Institutions viz. Scheduled Commercial Banks, Non Banking Finance Companies and Micro Financial Institutions, registered with Mudra Ltd.

The ongoing COVID-19 crisis and the consequent lockdown has led to severe disruption of business for micro and small enterprises which are funded through Shishu Mudra loans. Small businesses typically function on thin operating margins, and the current lockdown has had a severe impact on their cash flows, jeopardizing their ability to service their loans. This could lead to default in repayment and have a resultant impact on access to institutional credit in future.

As on 31st March 2020, about 9.37 crore loan accounts under the Shishu category of PMMY with a total loan amount of about Rs 1.62 Lakh crore, were outstanding.

Implementation strategy

The Scheme will be implemented through the Small Industries Development Bank of India (SIDBI) and will be in operation for 12 months.

For borrowers, who have been allowed a moratorium by their respective lenders, as permitted by RBI under the ‘COVID 19 Regulatory Package’, the Scheme would commence post completion of the moratorium period till a period of 12 months i.e. from September 01, 2020 till August 31, 2021. For other borrowers, the scheme would commence w.e.f. June 01, 2020 till May 31, 2021.

Major Impact

The Scheme has been formulated as a specific response to an unprecedented situation and aims to alleviate financial stress for borrowers at the ‘bottom of the pyramid’ by reducing their cost of credit. The Scheme is expected to provide much needed relief to the sector, thereby enabling small businesses to continue functioning without laying off employees due to lack of funds.

By supporting small businesses to continue functioning during these times of crisis, the Scheme is also expected to have a positive impact on the economy and support its revival, which is necessary for employment generation in future.

 

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Prime Minister Narendra Modi addressed the 5th National Conference of Chief Secretaries in Delhi, earlier today. The three-day Conference was held in Pusa, Delhi from 26 to 28 December, 2025.

Prime Minister observed that this conference marks another decisive step in strengthening the spirit of cooperative federalism and deepening Centre-State partnership to achieve the vision of Viksit Bharat.

Prime Minister emphasised that Human Capital comprising knowledge, skills, health and capabilities is the fundamental driver of economic growth and social progress and must be developed through a coordinated Whole-of-Government approach.

The Conference included discussions around the overarching theme of ‘Human Capital for Viksit Bharat’. Highlighting India's demographic advantage, the Prime Minister stated that nearly 70 percent of the population is in the working-age group, creating a unique historical opportunity which, when combined with economic progress, can significantly accelerate India's journey towards Viksit Bharat.

Prime Minister said that India has boarded the “Reform Express”, driven primarily by the strength of its young population, and empowering this demographic remains the government’s key priority. Prime Minister noted that the Conference is being held at a time when the country is witnessing next-generation reforms and moving steadily towards becoming a major global economic power.

He further observed that Viksit Bharat is synonymous with quality and excellence and urged all stakeholders to move beyond average outcomes. Emphasising quality in governance, service delivery and manufacturing, the Prime Minister stated that the label "Made in India' must become a symbol of excellence and global competitiveness.

Prime Minister emphasised the need to strengthen Aatmanirbharta, stating that India must pursue self-reliance with zero defect in products and minimal environmental impact, making the label 'Made in India' synonymous with quality and strengthen our commitment to 'Zero Effect, Zero Defect.’ He urged the Centre and States to jointly identify 100 products for domestic manufacturing to reduce import dependence and strengthen economic resilience in line with the vision of Viksit Bharat.

Prime Minister emphasised the need to map skill demand at the State and global levels to better design skill development strategies. In higher education too, he suggested that there is a need for academia and industry to work together to create high quality talent.

For livelihoods of youth, Prime Minister observed that tourism can play a huge role. He highlighted that India has a rich heritage and history with a potential to be among the top global tourist destinations. He urged the States to prepare a roadmap for creating at least one global level tourist destination and nourishing an entire tourist ecosystem.

PM Modi said that it is important to align the Indian national sports calendar with the global sports calendar. India is working to host the 2036 Olympics. India needs to prepare infrastructure and sports ecosystem at par with global standards. He observed that young kids should be identified, nurtured and trained to compete at that time. He urged the States that the next 10 years must be invested in them, only then will India get desired results in such sports events. Organising and promoting sports events and tournaments at local and district level and keeping data of players will create a vibrant sports environment.

PM Modi said that soon India would be launching the National Manufacturing Mission (NMM). Every State must give this top priority and create infrastructure to attract global companies. He further said that it included Ease of Doing Business, especially with respect to land, utilities and social infrastructure. He also called upon states to encourage manufacturing, boost ‘Ease of Doing Business’ and strengthen the services sector. In the services sector, PM Modi said that there should be greater emphasis on other areas like Healthcare, education, transport, tourism, professional services, AI, etc. to make India a Global Services Giant.

Prime Minister also emphasized that as India aspires to be the food basket of the world, we need to shift to high value agriculture, dairy, fisheries, with a focus on exports. He pointed out that the PM Dhan Dhanya Scheme has identified 100 districts with lower productivity. Similarly, in learning outcomes States must identify the lowest 100 districts and must work on addressing the issues around the low indicators.

PM also urged the States to use Gyan Bharatam Mission for digitization of manuscripts. He said that States may start a Abhiyan to digitize such manuscripts available in States. Once these manuscripts are digitized, Al can be used for synthesizing the wisdom and knowledge available.

Prime Minister noted that the Conference reflects India’s tradition of collective thinking and constructive policy dialogue, and that the Chief Secretaries Conference, institutionalised by the Government of India, has become an effective platform for collective deliberation.

Prime Minister emphasised that States should work in tandem with the discussions and decisions emerging from both the Chief Secretaries and the DGPs Conferences to strengthen governance and implementation.

Prime Minister suggested that similar conferences could be replicated at the departmental level to promote a national perspective among officers and improve governance outcomes in pursuit of Viksit Bharat.

Prime Minister also said that all States and UTs must prepare capacity building plan along with the Capacity Building Commission. He said that use of Al in governance and awareness on cyber security is need of the hour. States and Centre have to put emphasis on cyber security for the security of every citizen.

Prime Minister said that the technology can provide secure and stable solutions through our entire life cycle. There is a need to utilise technology to bring about quality in governance.

In the conclusion, Prime Minister said that every State must create 10-year actionable plans based on the discussions of this Conference with 1, 2, 5 and 10 year target timelines wherein technology can be utilised for regular monitoring.

The three-day Conference emphasised on special themes which included Early Childhood Education; Schooling; Skilling; Higher Education; and Sports and Extracurricular Activities recognising their role in building a resilient, inclusive and future-ready workforce.

Discussion during the Conference

The discussions during the Conference reflected the spirit of Team India, where the Centre and States came together with a shared commitment to transform ideas into action. The deliberations emphasised the importance of ensuring time-bound implementation of agreed outcomes so that the vision of Viksit Bharat translates into tangible improvements in citizens’ lives. The sessions provided a comprehensive assessment of the current situation, key challenges and possible solutions across priority areas related to human capital development.

The Conference also facilitated focused deliberations over meals on Heritage & Manuscript Preservation and Digitisation; and Ayush for All with emphasis on integrating knowledge in primary healthcare delivery.

The deliberations also emphasised the importance of effective delivery, citizen-centric governance and outcome-oriented implementation to ensure that development initiatives translate into measurable on-ground impact. The discussions highlighted the need to strengthen institutional capacity, improve inter-departmental coordination and adopt data-driven monitoring frameworks to enhance service delivery. Focus was placed on simplifying processes, leveraging technology and ensuring last-mile reach so that benefits of development reach every citizen in a timely, transparent and inclusive manner, in alignment with the vision of Viksit Bharat.

The Conference featured a series of special sessions that enabled focused deliberations on cross-cutting and emerging priorities. These sessions examined policy pathways and best practices on Deregulation in States, Technology in Governance: Opportunities, Risks & Mitigation; AgriStack for Smart Supply Chain & Market Linkages; One State, One World Class Tourist Destination; Aatmanirbhar Bharat & Swadeshi; and Plans for a post-Left Wing Extremism future. The discussions highlighted the importance of cooperative federalism, replication of successful State-level initiatives and time-bound implementation to translate deliberations into measurable outcomes.

The Conference was attended by Chief Secretaries, senior officials of all States/Union Territories, domain experts and senior officers in the centre.