The Finance Ministry, the Prime Minister's Office (PMO) and Ministry of MSME are mulling a relief package to provide some assistance to the stressed Micro Small and Medium Enterprise sector (MSME), government sources told CNBC-TV18.

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The coronavirus pandemic has caused immense hardship across industries and the MSME sector could be the next sector to receive some much-needed assistance.

Talking about the possible blueprint of the package, the sources said, "The ongoing discussions are to come up with a comprehensive strategy to ease the pain points of the

The government has been analysing multiple sectors over the past few days and holding discussions with stakeholders. Following the consultations, it was decided, according to the source, "MSMEs have been impacted at various levels including production, retail points, etc,” hence it will be a top priority for the government.

The government has identified certain challenges being faced by MSMEs due to the lockdown, one of which is eroding cash flow.

When asked about the strategy that the government would deploy for MSMEs, the source revealed, “The Finance Ministry has suggested to the PMO that a fund or common pool could be used especially for MSMEs."

"The said fund, once created can be used to extend interest-free loans with certain conditions, in some cases interest subvention and a lot more like one-time investment to kick start a cycle that has been stuck," the source added.

On the non-financial side, the government is considering to come up with measures like easing some of the procedural conditions and deadlines, increasing the limit of mandatory procurement from the sector, asking states to help build capacities, releasing government or PSU dues, the source said.

Meanwhile, MSME Minister Nitin Gadkari held discussions with senior officials of the ministry on April 9, and asked them "to go all out for the assistance for MSMEs by revising and upscaling the schemes after proper third party independent evaluation. He urged his officers to get in touch with all stakeholders for a coordinated relief for MSMEs”, the MSME Ministry said in a statement.

"In a structured discussion of over two and half hours, the minister took stock of the steps taken in the background of the pandemic that has dealt a huge blow on the sector. The ministry on its own, has already started extending some relief to the workers and artisans associated with the sector...

“The Khadi and Village Industries Commission (KVIC) has decided to release of Rs. 1000 per month to each registered artisan from the Artisan Welfare Fund (AWF) Trust. Moreover, khadi institutions have been directed to release AWF contribution into the bank accounts of artisans in three instalments," the statement read.

Further, the Confederation of All India Traders (CAIT) approached Finance Minister Nirmala Sitharaman on April 9 and requested that the central government release a stimulus package for the trading community to mitigate the impact of COVID-19.

CAIT advocated a slew of steps including a COVID-19 cash loan programme, insurance cover for traders and their employees engaged in supply of essential goods across the country, government subsidy in paying salary and wages to workers, increase in capping of Mudra loans from Rs 10 lakh to Rs 25 lakh waiver of interest for three months from April on bank loan, CC and OD limits, strengthening non-banking finance companies and micro finance institutions to provide loans to traders on minimal rate of interest and other various reliefs as a part of a stimulus package.

"Currently, the Country is under a lockdown till 14th April,2020 which has given a strong blow to trade & commerce activities led to shut down of about 7 crore business establishments of the traders which are employing about 40 crore people in the Country. CAIT has given a lot of suggestions seeking taxation relief, licence renewal relaxations, interest subvention, interest free moratorium, non-classification of NPA on delayed payments, etc," CAIT Secretary General Praveen Khandelwal said.

It remains to be seen when the government would unveil the much-awaited economic relief package for the sector.