The economic stimulus announced by the Union Finance Minister, Nirmala Sitharaman, on Wednesday will help improve the liquidity and cash flow of the struggling micro, small and medium enterprises (MSMEs), said K.R. Gnanasambandan, convenor of COVID-19 Redressal Committee of Madurai District’s Tiny and Small Scale Industries Association (MADITSSIA).
In a statement, Mr. Gnanasambandan said the announcement of collateral-free automatic loans worth ₹3 lakh crore would definitely help the sector. “However, the banks must also adhere to this announcement and sanction loans to the enterprises,” he said.
To provide ₹20,000 crore as subordiante debt for the stressed MSMEs was definitely a bold move, which had to be appreciated, he said.
However, the announcement of ₹50,000 crore equity infusion for MSMEs through Funds of Funds would only benefit the large enterprises and micro units at the bottom level would not benefit from this fund.
Commenting on the change in the definition of MSMEs, Mr. Gnanasambandan said that increasing the investment slab for each category might affect priority sector lending. “By increasing the investment slab, almost 99% units will fall under the category of micro industries in the district,” he said.
But the revised definition of MSMEs in terms of turnover was a welcome move, he said. “Though software companies and those involved in diamond exporting have less investment, they make thousands of crore as turnover. The revised definition will help in removing them from the MSME bracket,” he said.
It was laudable that the Finance Minister had announced that global tenders would be banned for government procurements upto ₹200 crore, he said. But, the demand for reduction of interest rate and postponement of GST payments had not been considered, he added.
