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Beyond Janta Curfew: Govt Must Ensure MSME Sector, Backbone of Economy, Survives Coronavirus

An employee works inside a garment factory. (Representative image from Reuters)

An employee works inside a garment factory. (Representative image from Reuters)

Narendra Modi must execute an elaborate and effective plan to assure the country that government will take care of the jobs and businesses, while fighting this health emergency in these testing times.

Hridayesh Joshi
  • Last Updated: March 21, 2020, 10:34 AM IST
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New Delhi: In his address to the nation on Thursday, Prime Minister Narendra Modi announced an Economic Response Task Force under Finance Minister Nirmala Sitharaman. This task force will decide on a package to deal with the crisis arisen due to the COVID-19 attack. However, the contours of the ‘relief package’ are not known yet, as they will be decided after a ‘feedback’ from all stakeholders and an analysis of the situation.

Meanwhile, panic has started to set in as a vast workforce stares at a bleak and uncertain future. Among the most important are Micro, Small and Medium Enterprises (MSME) and small businesses which employ more than 125 million people today. With the closure of malls, gyms, pubs, restaurants, spas, midnight bazaars and mandis, thousands of small entrepreneurs are facing a complete blackout of revenue.

“Those in supply chains of hotels, airlines, logistics and tourism and transport have seen business drop upto 90 per cent. Lakhs of other MSMEs in consumer goods, garments, automotive sector, exports have seen 50 to 70 per cent drop in orders,” says Raj Chawla, Chairman of Integrated Association of Micro, Small and Medium Enterprises of India, a non-profit institution that supports MSME.

The concern for MSME sector was reflected in the words of MSME and Road Transport and Highway minister Nitin Gadkari. On Monday, while responding to a question, Gadkari told Rajya Sabha that six lakh industries under the MSME sector have been restructured and the number will increase by the end of the year.

While the minister denied job losses or production losses in the sector, with the hardening grip of coronavirus, all employments and industries are bound to suffer. While the big Industries and businesses can stay afloat for some time, small industries are more fragile in nature.

According to a data provided by CII last year, the sector is adding almost 13 to 15 million jobs every year. The sector has more than 65 million units and produces over 6,000 different kinds of products which account for nearly 50 per cent of India’s export. This shows the importance of MSME which is often termed as the backbone of India’s economy.

However, due to coronavirus outbreak there are tremendous challenges for this medium, small and micro industry. Small entrepreneurs are worried on many fronts. Apart from paying the salary and wages, the pressure of statutory dues such as PF, GST, advance tax and running cost, which include the payment of electricity, water and other bills. The EMIs for pending loans from banks or financial institutions will make the situation worse for them.

As India prepares to fight back the highly contagious monster, restrictions on human movement are bound to stay for some time. This is surely hitting the businesses and the sector is demanding relief and grace period for loan installments, GST filings and other payments to stay afloat. The month of March and the first quarter of FY 2020-21 will be a real challenge for these entrepreneurs and they are expecting the RBI to issue guidelines regarding it.

Many countries have understood this and the leaders have announced packages to allay the fear. For example, Canada Prime Minister Justin Trudeau announced $ 82 billion dollar package to “protect the jobs and economy” in his country.

This is more than 3 per cent of the Canadian economy but Trudeau and his counterparts in many countries have rightly understood the importance of the stimulus.

Even the government of Kerala has announced ₹20,000-crore special package for the state to overcome COVID -19. Although it is focused on welfare pensions in advance, expenditure on food, subsidised meal and health package, it will definitely bring some relief to the common people.

PM Modi should take it to another high level. He has asked the citizens to observe a self-imposed curfew to defeat the pandemic. He should also execute an elaborate and effective plan to assure the country that government will take care of the jobs and businesses, while fighting this health emergency in these testing times.


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