State govt offers to bear six months’ interest on loans for industries

The Haryana government launched an interest subsidy scheme on Thursday for micro, small and medium enterprises (MSMEs) reeling under financial stress during the

The Haryana government launched an interest subsidy scheme on Thursday for micro, small and medium enterprises (MSMEs) reeling under financial stress during the lockdown period. Several industries had demanded a financial package from the state and central governments to pay salaries to their workers.

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The notification was issued after a cabinet meeting on Thursday evening said all the MSME units working in Haryana, as on March 15, 2020, will be eligible to 100 percent interest benefit on loans availed for payment of the wages of employees and/or other expenses up to a maximum of ₹20,000 per employee.

“The interest benefit shall be limited to the interest paid by the MSME unit to the bank up to a period of six months starting from March 15. The interest benefit shall be calculated at a rate of interest of maximum eight percent/year or actual rate of interest charged by the bank or whichever is lower,” said the notification.

The notification also said that once salaries for the month of April are paid to the workers, industries can apply to avail interest benefits on the industries and commerce department’s portal with all relevant documents.

“The interest subsidy scheme for the MSME has been approved by the Haryana government/cabinet and we believe it will act a catalyst in the revival of the industries in the state which are shutdown due to the outbreak of Covid-19 ,” said TVSN Prasad, additional chief secretary industries and commerce department, Haryana. Prasad, who prepared the draft of the interest scheme, added the Haryana government will refund the interest claimed by owners directly in their bank accounts.

Additional chief secretary Prasad said those industry owners who have not currently availed such loans can apply for a fresh loan to avail the interest subsidy being offered by the state government.

Most industries in the state have been shut since March 21, and a few of them were allowed to start operations after April 20 after taking permission from the administration. Industry owners in Gurugram, which is an MSME hub, said with zero production their financial liabilities were mounting as the had to repay their loans, pay workers’ salaries, goods and service taxes, electricity bills, rent etc. The fear of shutting down permanently also looms large over small industries that are under debt.

Following directions of the union ministry of home affairs (MHA), industry owners need to continue paying salaries to workers during the lockdown period. As the nationwide lockdown enters its third phase, many industries have been demanding financial relief.

The subsidy scheme, launched in light of such demands, has however come under criticism from several industry owners. They said that the procedure to avail the benefits is cumbersome and added that the capping of the scheme benefits at ₹20, 000 per employee and at 8 percent interest rate will not be extremely helpful to them.

Sanjiv Bansal, Kadipur-based industry owner, said, “Government should give us instant relief – we have to pay salaries to workers within a day or so. We do not want to apply for a bank loan and then avail the interest benefits later.”

Raj Singla, Udyog Vihar-based industry owner, said, “The interest benefit at of 8% interest and capping the benefits at ₹20,000 per employee seems insignificant, besides the apprehension of procedure being cumbersome and not hassle-free.”

Many small scale industries are not even confident of starting operations and do not want to bear the burden of a loan to avail interest benefits.

Aseem Takyar, an industry owner in Udyog Vihar, said, “The Haryana government should have rather announced relaxation in goods and service tax (GST) by instantly reducing its rate from 12 percent to six percent. We do not want to avail this subsidy scheme.”