Decoding Economic Package from the Perspective of MSMEs’ Battle with COVID 19
Instead of making loud applause, SMEStreet is excited and looking forward for the successful execution of the great Economic Package announced by PM Narendra Modi and FM Mrs. Sitharaman. Undoubtedly, this is a great announcement and this shows strong signs of motivation for every entrepreneur. However, here is a decoded economic package from the perspective of MSMEs' Battle with COVID 19.
In the last two months, things have turned upside down everywhere. the Coronavirus pandemic have taken most countries in its grip and economic activities have almost gone on standstill mode. Well, the ball went into the policymaker’s side and their challenge was and ‘it still is’ to enable or create such policies and programs which may restart the economic activities. Having said this, the Prime Minister office, the Finance Ministry, Ministry of Commerce, Ministry of MSME, the RBI and various other concerned departments have created a special economic package for the economy to come back.
Recently Prime Minister Narendra Modi unleashed a mega economic package of 20 Lakh Crores and later Finance Minister Nirmala Sitharaman has started elaborating the package in a series of Press conferences. Well the motivating aspect for us, is the fact that MSMEs are kept on the top priority of this economic package.
As an important development, earlier this month, Mr. AK Sharma has taken over as the Secretary of MSME, Ministry fo MSME. Well, his appointment is also a very clear indication of a high-end action plan for MSMEs. In his first address to the ministry of officials, Mr. Sharma mentioned his priorities and he clearly indicated that he is going to work on making Indian MSMEs or small companies a large global brand. Well almost a week after Secretary’s speech, PM Modi addressed the nation and mentioned his vision for making global brands from India on the lines of today’s existing international brands. All these developments show a great sign for MSMEs.
Decoding Economic Package for MSMEs
Well, here is the first cut on the industry’s reaction following the economic packages announcements.
On Prime Minister and Finance Minister’s recent policy updated in order to enable MSMEs to respond positively in the COVID-19 crisis, Jayant Krishna, Senior Fellow, Center for Strategic and International Studies (CSIS) & Executive Director, Public Policy, Wadhwani Foundation shared his observations by saying, “The Finance Minister’s announcements would surely go a long way in preventing the collapse of the MSME sector. The Rs 3 lakh crores collateral-free automatic loans; Rs 20,000 crore subordinated debt for stressed units; Rs 50,000 crore equity infusion through the fund of funds; EPF concessions and support; Rs 30,000 crore special liquidity scheme for NBFCs/HFCs/MFIs and Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs – are all steps in the right direction which have been an integral part of the industry’s wish-list. Rs. 90,000 crore liquidity injection into DISCOMs would be excellent for the health of the energy sector which is critical for the entire economy.”
“These measures would enable India to garner investments and create jobs, emanating from worldwide anti-China sentiments.” Jayant Krishna of Wadhwani Foundation.
Jayant further adds, “Taking these great MSME relief announcements ahead, and in line with the Prime Minister’s address to the nation, it would be great if the Government treats the COVID-19 crisis as an opportunity to recreate the magic of the economic reforms undertaken in 1991. Land reforms, trade liberalisation, labour laws rationalisation, clean-up of PSU banks with dilution in Government’s stake, technology-led systemic changes to improve the ease of doing business, skilling focus on employability and apprenticeship and transformation in healthcare delivery are extremely critical. Such big-ticket economic reforms would lead to rationalisation and enhancements in parameters which shall increase the attractiveness of India as an investment destination. Such reforms would improve the overall eco-system and result in the creation of more jobs. In addition, these would enable India to garner investments and create jobs, emanating from worldwide anti-China sentiments.”
Deepak Jain, Director-General, Federation of Indian Industries
The provision for disallowing global tenders up to Rs. 200 crores is a welcome step. The new self-reliant India will be supporting the Make in India mission of the Govt.” Deepak Jain, OF Federation of Indian Industries
Federation of Indian Industry ( FII) Thanks Hon’ble Prime Minister Sh. Narendra Modi and Hon’ble Finance Minister Smt. Nirmala Sitharaman to have accepted many of the demands raised by FII for the economy of the country.
Praising Govt’s step of allocating Rs. 3 Lac Crores as collateral-free automatic loan for businesses including MSMEs, Deepak Jai of FII stated, “It is a very welcome step and it was needed. Although we had requested for 10 years repayment period, they have agreed to 4 years tenure with 12 months moratorium and Government will stand Guarantee for such loans and 45 lac units shall be benefitted from this.”
Mr. Jain also added, Further, equity infusion of Rs. 50,000 crores have been done as a mother of funds for MSME. Govt. proposes to revise the investment limit and turnover criteria are also being introduced in the definition of MSME. In the long run, it may not be in the interest of MSME. The provision for disallowing global tenders up to Rs. 200 crores is a welcome step. The new self-reliant India will be supporting the Make in India mission of the Govt.”
“We welcome the steps taken by the Govt. and shall continue to support the positive steps of the Govt. of India,” says Deepak Jain, Director-General, Federation of Indian Industries.
Real Estate’s Perspective
Mr. Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd.
Mr. Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd shared his views on the recent announcements made by Finance Minister Nirmala Sitharaman by quoting, “It is impressive to note that the Government is using the lockdown period to make major reforms and corrections in the structural and important elements of the economy. As far as real estate is concerned, the extension of the credit-linked subsidy scheme under PMAY- which offers an interest subvention on loans taken by the middle-class sections with an income of Rs 6-18 lakh will definitely help sustain the demand for affordable housing. The allocation planned for providing basic rental accommodation under the PPP model is certainly a better way to improve the quality of living for urban migrants and poor in our big cities. Though details are not available, we believe these projects can boost construction activities and investments in real estate assets across India’s cities.”