What’s the Best to Help MSME Sector

In this hour of need, the Indian government has to recreate strategies to strengthen the falling MSME niche, which is still wounded with the first wave
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

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  • May 24,2021
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  • 10 Mins Read

The second wave of COVID-19 has hit the MSME sector harder than expected. The MSME segment, which is a backbone of the Indian economy, has stumbled again. According to the latest report by The Economic Times, Assocham has demanded from the Indian government a 'concentrated and right kind' of relief package for the MSME sector, which was most affected by the covid-19 pandemic.

In the previous year, the Indian government had taken various moves to uphold the MSME sector. The Finance Minister of India, Nirmala Sitharaman had changed the definition of the MSMEs. This decision came as a relief for the industry, which holds a large portion of micro-businesses. 

Besides this, a loan moratorium and several financial aid programs were introduced to help small businesses overcome monetary challenges. 

However, a little transition was evident in the market. After the lockdown was lifted in the previous year, small companies and MSMEs hoped to cover losses that were incurred owing to the epidemic. The economy has been steadily burgeoning but the second wave inflicted the business ecosystem with its virus.

In this hour of need, the Indian government has to recreate strategies to strengthen the falling MSME niche, which is still wounded with the first wave. 

"Yes, there is a need for a relief package which has to be directed very carefully. We at Assocham believe that both the Centre and the states need to come together with certain plans, so that we can give a concentrated, focused and the right kind of relief to whoever needs it the most," Assocham president Vineet Agarwal told PTI

The industry body, Assocham has given various advice to the government to save suffering MSMEs. It has requested banks to increase the working capital limit by 20 per cent for the MSMEs. However, it has urged the banks to not charge any extra collateral.

Secondly, re-classification of NPAs of MSMEs should be done, Agarwal said. 

"Certainly, there is a need for some kind of impetus at various levels and more at the MSME level," said Agarwal, who is also the managing director of Transport Corporation of India Limited (TCIL).

Relief for Street Vendors and Shopowners 

Various small businesses do not have access to the working capital to pivot their business. These businesses play a crucial role in society; they look after small essential needs of the neighbourhood and locality. Therefore, it is imminent for them to continue working despite the prevailing circumstances.  

To aid such businesses, the government has to form a relief for them. The condition of rural areas should not go unnoticed. The country’s rural sector is equally disrupting like urban areas. A relief package, thus, is formulated for rural areas, small shopkeepers, and street vendors. 

Aid Adversely Impacting Industries 

Similar to the previous year, many industries are suffering anew. There is a demand cut as well as a supply shortage. While large companies can easily get through this adversity, small ones are grappling to sustain the market pressure. 

At this juncture, the central government and the RBI should create policies to elevate industries and avert economic recession.  

 

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