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CIA: 88% SMBs yet to avail any stimulus package benefits

Context:

The findings of a survey conducted by the Consortium of Indian Associations (CIA) show that as many as 88% of self-employed, small and medium businesses (SMB) said they were yet to avail any benefit under the stimulus packages introduced by the Centre while 82% felt the Union and State governments were not taking care of their interests.

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy), GS-II: Social Justice (Government’s Welfare Schemes)

Dimensions of the Article:

  1. SMB (small and medium-sized business or small and midsized business)
  2. Predicament of the SMBs in India

SMB (small and medium-sized business or small and midsized business)

  • SMB is an abbreviation for small and medium-sized business, sometimes seen as small and midsized business. A business with 100 or fewer employees is generally considered small, while one with 100-999 employees is considered to be medium-sized.
  • ‘SMBs are critical to our economy as they contribute nearly a third of our GDP and generate employment for millions.
  • The ongoing pandemic has impacted SMBs as much as any other segment’ but the agility and flexibility in their operations, coupled with the adaptability to changing business environments and customer needs means they can bounce back far more quickly.

Predicament of the SMBs in India

  • 73% of SMBs have not made any profit during the last fiscal and 42% were unable to decide on retention of employees, 59% said they reduced/sacked/removed their staff compared witho the pre-COVID period.
  • The findings also touched upon the point that the laws relating to land use by industries, especially MSMEs, need a relook as these were not conducive to their growth.

Way Forwards suggested by the CIA

  • The findings suggest that the government should adopt a three-pronged approach towards SMBs viz. exempting them from statutory compliances, penal actions and litigation; protecting them from high interest burden, price wars, high cost of raw materials, losing employees, penalties, and late fees and supporting them by giving liberal loans, clearing pending dues, offering moratorium with interest waiver and not declaring NPAs for the sector for a year.
  • CIA has proposed that the government amend the Micro, Small and Medium Enterprises Development Act, 2006, to strengthen State facilitation councils.
  • CIA has highlighted a series of long term and short-term measures to the Central and State gGovernments to beat the impact of the lockdown on the SMBs.
  • It has also proposed to start collecting data of sSelf-employed, MSME businesses in the country from banks. Based on this data, the business type could be correctly classified as traders, professionals, service providers, exporters, engineering enterprises, etc., as well as employees in them as migrant and formal.

-Source: The Hindu

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August 2022
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