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Government Launches Vivad se Vishwas Scheme Relief For MSMEs Impacted By COVID-19

The Ministry of Finance has established a new scheme called “Vivad se Vishwas I – Relief to MSMEs” under the Department of Expenditure. The goal of this programme is to help Micro, Small, and Medium Enterprises (MSMEs) affected by the COVID-19 pandemic. The initiative was launched as part of the Union Budget 2023-24 by Union Finance Minister Smt. Nirmala Sitharaman. Smt. Sitharaman announced the plan in Para 66 of her budget address.

In cases of failure by MSMEs to execute contracts during the COVID period, 95 per cent of the forfeited amount relating to bid or performance security will be returned to them by Government and Government undertakings. This will provide relief to MSMEs.

On February 6, 2023, the Ministry of Finance’s Department of Expenditure published an order defining the scheme’s general framework. On April 11, 2023, a final set of instructions was issued, broadening the scope of the relief to include further cases and reducing return limitations. The plan went live on April 17, 2023, and claims can be lodged until June 30, 2023.

The COVID-19 pandemic has been one of the most catastrophic catastrophes in human history, with severe economic consequences, particularly for MSMEs. This scheme is part of the government’s ongoing efforts to support and promote the MSME sector.

The plan calls for Ministries to reimburse performance security, bid security, and liquidated damages that were forfeited or deducted during the COVID-19 epidemic. Furthermore, some relief has been provided to MSMEs that were barred due to contract execution failures during the pandemic.

Vivad se Vishwas Scheme Relief For MSMEs – Eligibility Criteria

The Secretaries of all Ministries/Departments of the Government of India, as well as the Chief Secretaries/Administrators of Union Territories, have received an Office Memorandum from the Department of Expenditure.

According to the memorandum, all contracts for the procurement of goods and services entered into by any Ministry/Department/attached or subordinate office/autonomous body/Central Public Sector Enterprise (CPSE)/Central Public Sector Banks/Financial Institution, etc., with MSMEs that meet the following conditions will be granted relief:

Vivad se Vishwas Scheme Relief For MSMEs – Benefits

This scheme from the Ministry of Finance provides additional benefits to eligible MSMEs that were affected during the COVID-19 period. The following benefits will be provided:

What Is MSME And Its Purpose?

In 2006, the Micro, Small and Medium Enterprises Development (MSMED) Act was introduced to address policy concerns affecting MSMEs, as well as the coverage and investment threshold of the sector. The objective of the act is to support the development of these enterprises and enhance their competitiveness. It establishes the first-ever legal framework for recognizing the concept of an “enterprise,” which includes both manufacturing and service entities.

For the first time, it defines medium enterprises and aims to integrate the three tiers of these enterprises, namely, micro, small, and medium. The act also provides for a statutory consultative mechanism at the national level with balanced representation of all stakeholders, particularly the three classes of enterprises, and with a wide range of advisory functions.

The Act has specific funds for the promotion, development, and improvement of these enterprises. It also promotes progressive credit policies, preference in Government procurements for products and services of micro and small enterprises, more effective mechanisms for mitigating the problems of delayed payments, and assurance of a scheme for easing the closure of business by these enterprises.

On May 9, 2007, after an amendment of the Government of India (Allocation of Business) Rules, 1961, the erstwhile Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries merged to form the Ministry of Micro, Small, and Medium Enterprises (M/o MSME). This Ministry designs policies and promotes/ facilitates programs, projects, and schemes and monitors their implementation with a view to assisting MSMEs and help them to scale up.

Vivad se Vishwas Scheme Relief For MSMEs – FAQs

Q1: What is “Vivad se Vishwas I – Relief to MSMEs” scheme?

Ans: “Vivad se Vishwas I – Relief to MSMEs” is a scheme set up by the Ministry of Finance’s Department of Expenditure to assist Micro, Small, and Medium Enterprises (MSMEs) affected by the COVID-19 pandemic. The strategy seeks to recoup performance security, bid security, and liquidated damages that were forfeited or deducted during the COVID-19 outbreak. It also helps MSMEs that were prevented from doing business due to contract execution errors during the pandemic.

Q2: When was the scheme “Vivad se Vishwas I – Relief to MSMEs” launched, and who announced it?

Ans: Union Finance Minister Smt. Nirmala Sitharaman announced the scheme as part of the Union Budget 2023-24. In paragraph 66 of her budget address, she disclosed the idea.

Q3: When did the scheme “Vivad se Vishwas I – Relief to MSMEs” go live, and until when can claims be lodged?

Ans: The scheme went live on April 17, 2023. Claims can be lodged until June 30, 2023.

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