Budget 2019: Government Extends Pension Scheme To Three Crore Retailers

The government to provide pension for retail traders with annual turnover less than Rs 1.5 crore.

Employees use sewing machines on a production line at the CBC Fashions Pvt. factory in Tiruppur, Tamil Nadu. (Photographer: Dhiraj Singh/Bloomberg)
Employees use sewing machines on a production line at the CBC Fashions Pvt. factory in Tiruppur, Tamil Nadu. (Photographer: Dhiraj Singh/Bloomberg)

The Narendra Modi-led government will extend pension benefit to three crore retail traders and shopkeepers under ‘Pradhan Mantri Karam Yogi Maandhan Scheme’.

Presenting the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman said all the goods and services tax-registered micro, small and medium enterprises with an annual turnover of less than Rs 1.5 crore will be eligible for the pension benefit.

Prospective beneficiaries can enroll for the PMKYM scheme with Aadhaar cards and bank accounts through a self-declaration process.

Earlier this year, then Finance Minister Piyush Goyal had launched a similar scheme called the ‘Pradhan Mantri Shram Yogi Maandhan Yojana’, which provided unorganised sector workers with monthly incomes of up to Rs 15,000 an assured monthly pension of Rs 3,000 after 60 years of age.

Sitharaman said as over 30 lakh workers have joined the PMSYM scheme since its inception, the government decided to extend it.

According to the budget document, PMKYM and PMSYM schemes have been allocated Rs 750 crore and Rs 500 crore, respectively.

This move will translate into stability and growth of the retail sector, Sampad Swain, chief executive officer and co-founder of Instamojo, an e-commerce platform that helps small businesses sell online, told BloombergQuint. The sustenance of existing businesses, he said, would give birth to newer ones.

Since the Indian retail sector is still majorly driven by small businesses and traders, the pension scheme would provide them with a long-term life plan, he said. It will also help to formalise this majorly unorganised sector, he said.

Interest Subvention Scheme

The government has allocated Rs 350 crore under the interest subvention scheme for MSMEs for 2019-20, Sitharaman said.

The 2 percent interest subvention scheme will be available to all GST-registered MSMEs on all fresh or incremental loans. The central government’s share will be matching the subscriber’s contribution.

“The government payments to suppliers and contractors are a major source of cashflow, especially for SMEs and MSMEs. Investment in MSMEs will receive a big boost if these delays in payment are eliminated,” Sitharaman said. “The government will create a payment platform for MSMEs to enable filing of bills and payment.”

This will cut down the time taken for MSMEs to receive their dues.

Union Minister for Micro, Small and Medium Enterprises Nitin Gadkari had earlier told Parliament on Thursday the government would create an online marketplace for MSMEs and the Khadi and Village Industries Commission.

According to Aiswarya Ravi, chief financial officer of Kinara Capital, a dedicated online payment platform for the MSMEs will be a big boost to small businesses as it will reduce their credit cycle and help them to actively manage their payments.

“The new e-marketplace platform will help in cutting down credit cycles for MSMEs. And MSMEs can increase their economic potential and sales reach beyond their local regions with new e-channels that will allow them to sell their products easily,” she said.