The industry has had mixed reactions towards the package announced by the Centre to give a fillip the MSMEs that make up the bulk of employment in the industrial sector which has been in dire straits following the COVID-19 pandemic.
While some industrialists were happy with the package, a few felt it was grossly adequate. Some cited tight liquidity as the chief challenge faced by the MSMEs.
Devesh Agarwal, President, BCIC, said while the sector welcomes the intent of the “Atma Nirbhar” package, it is “grossly inadequate.” The lockdown has left the entire business community bereft of cash.
Until the government issues mandatory directions to banks and financial institutions to lend to MSMEs instead of deploying funds into markets and government securities, we are looking at a dark future, he said. BCIC has recommended utilisation of ESI funds to provide unemployment benefits to workers, among other things.
Chandrajit Banerjee, Director General, CII, however, argued that the finance minister had unveiled an “impactful package.” The first phase targets the key sectors of MSME, Employees Provident Fund, Discoms, and taxation, among other major areas that are the most impacted, he said.
The six measures announced by the finance minister for MSME sector are very well-targeted and meet the immediate as well as longer-term requirements of the sector, he added. The CII had suggested that credit be provided for MSMEs without collateral requirement and with a guarantee from the government. The proposal to make the delayed payments from the government and PSEs to MSMEs was a long-standing request of the industry.
“The most important announcement with long-term implications is the quantum jump in the definition of MSME, which had not been changed since the MSME Development Act of 2006 and was long-awaited. Along with the decision to not have global tenders for government procurement up to ₹200 crore, the redefinition will assist the MSME sector to grow and emerge as a vibrant and dynamic sector, contributing to self-reliance and employment in a big way,” said Mr. Banerjee.
KASSIA too welcomed the relief package. “We particularly thank the government for the collateral-free automatic loan which will be funded up to ₹3 lakh crore and benefit over 45 lakh MSMEs with a loan tenure of four years moratorium on repayment of one year,” said R. Raju, President, KASSIA.
“While, the measures announced will be beneficial and hopeful, everything will depend on how these are implemented on the ground, particularly how the banks will look at these schemes and how proactive they will be in providing funds to the MSMEs to revive sector which is in deep crisis,” added Mr. Raju.
