What are some of the things that the government has been doing?
As of now, RBI (reserve bank of India) has announced an indicative list of COVID-19 operations and business continuity measures to be brought in place by scheduled NBFC (non-banking financial companies), commercial banks, payment banks and so forth. Financial institutions have been called to assess the effect of the health crisis on their asset quality, balance sheet, liquidity and so forth and launched contingency measures to manage and tackle risks.
The RBI (reserve bank of India) has enabled a moratorium on term loans, eased the working capital financing and postponed interest payment on the working capital facilities without an asset classification downgrade. When it comes to ad-hoc relied measures, many public sector banks have initiated emergency credit lined whereby a maximum loan amount of up to Rs. 200 crores 10% of the existing fund based working capital limits can be availed by the borrowers who are looking to get registration under MSME.
India’s small industries development bank has launched a concessional interest rate of five percent for MSME loans under the SIDBI assistance to facilitate emergency response against the pandemic. These loans will be offered within two days, without any need of collateral and minimum paperwork, but only to those MSMEs manufacturing products, delivering or delivering services concerning the COVID-19 fight will be eligible for these government-initiated loans. The government has also launched measures that allowing delayed GST payments to be paid by June 2020, without levy of interest, late fees or penalties. It becomes pertinent to carry out the registration under MSME (micro, small and medium enterprise) if your business comes under the provisions of MSME.
A comprehensive MSME policy framework is the need of the hour
The ministry of MSMEs (micro, small and medium enterprises) must draw up a policy framework with various scenarios for continuing business operations to limit the spread of the virus. Governments across the globe have been using several policy measures to soften the economic blow generated by the pandemic to their MSME (micro, small and medium enterprise) sectors. A policy framework can be considered for the Indian MSME (micro, small and medium enterprise) sector as well, one which is based on promoting their resilience to the devastation of this health emergency, not just in the short-term but also for the medium and the long-term—considering both the supply and demand-side impacts of the pandemic. It is crucial to remember that the shortage of accurate information on this sector is due to the absence of a dedicated MSME census in recent years (the last such MSME census was done in 2006-07).
The lack of a comprehensive and verified MSME database can impact the targeted relief delivery and make access to credit more accessible for enterprises that require it the most.
Having said that, the proposed policy framework can consider the things as given below;
– Measures to alleviate the impact on the MSME labour workforce – In India almost eleven crore people have been working under the MSME sector and which is generally informal enterprise. Government can provide them the wage support to keep their life running under the tough times.
– Measures to enhance easy access to credit – here NBFCs can play a larger role in providing the credits to MSMEs and SIDBI can also incentivise banks to lend money or credit that help rebuild your company with low finance.
– Measures to defer utility and social security payments – treatment of the water, electricity bills, and other utility bills can be examined especially under the lockdown. It would be really helpful to the small units operating their business in India.
– Special measures for self-employed and owner-managed enterprises – it would be crucial that the self-employed MSME units be provided the safety net required to navigate this crisis by the room to compensate by the government.
Besides the measures mentioned above, it is also essential to make a plan to allow businesses to reopen the activities slowly and steadily in a phased manner, with all the COVID-19 protocols in place. Frequent and surprise checks even might be introduced to impose state guidelines. But it is crucial now to engage with the idea of slowly restarting the business operations in the area with low infection levels, though with vital precautionary and necessary measures in place.
MSME as a sector has been hit with the hardest blow during the lockdown throughout the country that is why it becomes mandatory for the government to come up with something that would rescue the MSME sector from the scourge of the pandemic
