Government Support Extended To MSMEs During Covid-19
MSME sectors require financial aid from the government to survive the pandemic. The CII (Confederation of Indian Industry) has addressed to focus primarily on increasing the financial support to MSMEs along with relaxed collateral norms.
What Are Challenges For The MSME Sector Amidst This Lockdown?
The MSME sectors are hit probably the hardest amidst this lockdown. These sectors provide 30% of India's total GDP (Gross Domestic Product) and provide employment to almost 114 million people. The supply chain has disrupted severely in this lockdown and these sectors are unable to meet their immediate capital requirements.
A recent survey has revealed that about 26% of businesses have had an impact on their sales and purchase due to covid 19. They are facing severe liquidity issues and require financial aid and easy loans from the NBFCs (Non banking financial companies) and MFIs (Micro Finance Institutions). The exports have also become stagnant. MSMEs make up half of the country's total exports. WTO (World Trade Organization) has projected that the global trade will face a decline between 13% to 32% in 2020 as countries across the world have declared mass lockdown to fight covid-19.
Experts say that these MSME sectors require the Government to roll out incentive packages otherwise the restoration of these sectors will not be possible and the economy will suffer a terrible setback. It is also important to note here that the workers have migrated back to their villages or hometowns amidst lockdown which will be another problem the Government has to deal with as this will affect the workforce once the economy recovers.
What Are The Measures Undertaken By The Government To Support MSME Sectors?
It is said that even though the covid-19 pandemic has created a tight situation in the economy, proper measures can provide some relief to the small businessman and traders. The government has announced various relief measures and has also revised and upgraded the schemes and benefits related to MSME sectors. A brief inside two such measures are as follows:- MSME minister Nitin Gadkari has urged the MSME sectors to look for opportunities amid covid-19 crisis. Countries such as Japan and the US have their industries withdraw their investments and funds from China. This can provide an opportunity for Indian or domestic market to replace China's influence in the global market or world economy. As the imports from China have been suspended amidst the lock town, it is the right time for these sectors to pump out products locally. This will increase flow of funds in the economy as most of the products will be manufactured locally.
RBI has decided to inject more cash in the economy and also relieve MSME sectors either by extending their loan repayments or even relaxing some bad loans. RBI has also introduced long term repo operations to help Banks to provide loans at cheaper rates. Finance minister, Nirmala Sitharaman has also announced the extension of the last date of returning income tax and GST to June 30. MSME Minister Nitin Gadkari has also declared that a fund of rupees 10,000 crores will be approved by the centre to buy up to 15% equity in MSMEs. He also said that a separate scheme is also being considered and formulated for the credit rating of these MSMEs based on their turnover, exports and GST returns.
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