Congress chief Sonia Gandhi has written a letter to Prime Minister Narendra Modi with five recommendations to help the micro, small and medium scale enterprises (MSME) sector amid the coronavirus pandemic.
She said MSMEs contribute close to one-third of India’s gross domestic product (GDP) and account for almost 50 per cent of the country’s exports. The sector also employs over 11 crore people. But the lockdown necessitated by the COVID-19 pandemic has put most economic activities to a halt and over 6.3 crore MSMEs “stand on the verge of economic ruin”, she said in the letter.
“Every single day of the lockdown comes at a cost of Rs 30,000 crore to the sector. Nearly all MSMEs have lost sales orders, seen a complete cessation of their work, and have had their revenue negative impacted by the lockdown,” the Congress chief said.
She recommended five steps that could be considered for helping the MSME sector.
“First, announce a Rs 1 Iakh crore MSME Wage Protection package. This would go a long way in shoring up these jobs, boosting morale as well as greatly alleviating the predicted economic spiral,” she said.
“Second, establish and deploy a credit guarantee fund of Rs 1 lakh crore. This is necessary to provide immediate liquidity to the sector and ensure adequate capital is available to MSMEs at a time when they need it the most,” she said.
“Third, actions taken by RBI (Reserve Bank of India) must get reflected in actions by commercial banks to ensure adequate, easy and timely credit supply to MSMEs. Furthermore, any monetary action at the RBI’s end must be supported by sound fiscal support from the government. A 24×7 helpline in the ministry to provide guidance and to assist MSMEs during this period would also be of enormous value,” the Congress chief said.
“Fourth, these measures need to be supported by an expansion and extension of the RBI’s moratorium on payment of loans for MSME beyond the stipulated period of three months. The government should also explore a waiver/reduction of taxes for MSMEs and other sector specific measures.”
“Fifth, high collateral security is leading to denial of credit. Same is the case with limits on margin money being extremely high. These factors combine to ensure a lack of access to available credit for MSMEs and must be addressed,” Gandhi said.
The government has allowed a limited reopening of shops in neighbourhoods and residential areas, more than a month after the nation went into a lockdown to curb the spread of the coronavirus.
Late on Friday, the Home Ministry said retail shops (kirana stores) could start operations with the staff number reduced by 50 per cent, while also requiring appropriate social distancing, wearing of masks and gloves during work.
The sale of liquor and other non-essential items will continue to be prohibited, and no shops in large market places, multi-brand and single-brand malls will be allowed to open.