Bikky Khosla | 19 May, 2020
The micro, small
and medium enterprise (MSME) sector, which has been
hit hard by the economic shock caused by the Coronavirus pandemic, received a major
relief in the form of a tailor-made stimulus package announced by the government
last week. Several long-pending reforms have also been introduced as part of a
larger Rs 20 lakh crore package, and it is now widely expected that this
massive push will aid the sector combat the unprecedented COVID-19 shock.
First of all, a comprehensive credit support
package has been announced for the sector: Rs 3 lakh
crore collateral-free automatic loans for businesses to meet operational
liabilities, buy raw material and restart business; Rs 20,000 crore of
subordinated debt benefit in order to rescue stressed MSMEs; and Rs 10,000
crore to help potential and viable MSMEs expand their capacity. Thus, our
cash-strapped MSMEs are expected to get a much-needed relief, which is
encouraging beyond any doubt.
Then, another set of important announcements:
change in definition of MSMEs and faster release of MSME payments. In the first
case, both investment and turnover aspects are taken
care of. Now higher investment limit will encourage existing units to modernize
without worrying about losing their MSME status, while also eliminating the fear that a definition solely based
on turnover could erode the manufacturing industry. Similarly, it is welcome
that all MSME receivables will now be honoured by the Centre and Central Public
Sector Enterprises in the next 45 days.
No doubt, these proposed measures, along with the
Centre's decision not to float global tenders below Rs 200 crore; a support of
Rs 4,000 crore to CGTMSE and e-linkage for
MSMEs, are more than welcome, but the fact must be acknowledged – both by the
government and its critics-- that it is hardly possible to address all the
challenges facing the sector in just one go. Only time will say how things are
worked out in the coming days, and what more can be done to actualise the
sector's true economic potential.