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Covid-19: MSMEs hope for govt aid to revive sector
Coronavirus crisis: Facing staggering losses on account of the ongoing lockdown to check the spread of COVID-19, the MSME sector is looking for help from the union government.
A fund similar to the PM-Kisan scheme, re-opening industries where work from home is possible, and complete waiver of bank charges on all types of loans are among the slew of suggestions made to the union government to revitalize micro, medium and small enterprises (MSMEs).
Facing staggering losses on account of the ongoing lockdown to check the spread of Covid-19, the MSME sector is looking for help from the union government, which is expected to announce an economic stimulus package soon.
Estimated to employ 110 million people, over 63.3 ,million MSMEs in the country contribute nearly close to half of the country’s total exports and almost a third of India’s GDP, according to government data.
Sudarshan Sareen, president of the All India Manufacturers’ Association said MSMEs should be offered help on the lines of relief packages announced for farmers in times of distress. “The way the government has come up with a PM-Kisan scheme that gives farmers Rs 2,000 in their bank accounts, there should be some aid for the manufacturers whose production has stalled. Small factories cannot run unless the government offers help during this time of a national emergency.”
AIMO has already issued a statement citing the difficulties being faced by member MSMSEs to pay wages and not cut jobs as instructed by the government.
“If banks don’t offer short term loans that will need to be repaid only after a year at maximum 4% interest, it will become untenable for many manufacturers to keep business going,” Sareen added.
The need for setting up a COVID fund with a corpus at least Rs one lakh crore to roll out relief measures immediately was also flagged by former union minister and Congress leader Jairam Ramesh in a letter to MSME minister Nitin Gadkari.
On Thursday, HT reported that the government is considering just such a fund with a corpus of Rs 50,000-75,000 crore
“To ensure liquidity for business continuity, the government must direct all its agencies and public sector units, to pay their bills immediately, similar to the initiative taken under NHAI. Financial institutions should reschedule or restructure loans, as well as offer 6-month payment moratoriums to MSMEs. Extend soft loans with approximately 50% government guarantee for affected sectors through SIDBI, along with an adhoc enhanced working capital limit of 25% on request,” Jairam suggested.
Laghu Udyog Bharati, an affiliate of the Rashtriya Swayamsevak Sangh (RSS) that works with the MSME sector wrote to union finance minister Nirmala Sitharaman on Tuesday, seeking a complete waiver of bank charges and fees on all types of loans and advances to all micro and small industries from all banks and financial institutions with effect from March 1, including interest of this period until the restart of production, considering the lockdown period as “force majeure.”
While MSME ministry officials could not be reached for a comment, Gadkari on Thursday, held a meeting with officials through video-conferencing to review the existing schemes and draw up a future plan.
In a tweet about the meeting, Gadkari said, its main purpose was to get the ministry and MSME ready for the future. “Reviewed the status of the existing schemes and discussed the future course of action. We are taking steps to make our industry COVID ready and both ministry and field organizations are taking necessary steps to support them in that direction. Thrust is to get industry feedback and take action in the short term. #IndiaFightsCorona.”
