Why in news?
Warning that the COVID-19 lockdown has thrown MSMEs — Micro, Small and Medium Enterprises — into deep distress, opposition has urged the Centre to set up a ₹1 lakh crore corpus fund as part of a relief package for the sector.
Views of the Opposition
- There are over 6.3 crore MSMEs in the country, which account for almost half of all exports and a third of the national GDP.
- They employed 11 crore people, and were struggling to pay wages, given the shutdown of many businesses, the sharp depression in demand and a massive cash crunch.
- With the vast majority of MSMEs not obligated to have PF accounts for their workers, the measures announced by the Finance Minister to support organised sector workers would not give them much relief.
Recommendations of the opposition
Steps recommended apart from post-lockdown steps to improve consumer sentiment and investment appetite:
- tax sops and other measures to ensure liquidity
- preventing mass unemployment
- deferring payment of dues
- pausing litigation against MSMEs
- Calling the corpus fund for an immediate rollout of distress relief measures.
- A 24×7 control room and helpline were also needed to provide cross-country logistics support to ensure supply chain continuity during the lockdown
- Loan restructuring options, and a 6-month moratorium on payment of dues to ensure liquidity.
- Ad-hoc working capital loans up to a maximum of Rs. 30 lakhs could also be offered to enterprises which had no finance facilities from public sector banks.
- Women entrepreneurs and those from disadvantaged communities should be given priority.
- Tax payments could also be deferred for six months, while property taxes and other local body taxes could be waived for three months.
- All government agencies and public sector units pay their bills to MSMEs immediately.
- Provide wage subsidies to employers, and give tax credit to companies giving paid sick leave up to four weeks.
- The self-employed, including hawkers, small shopkeepers, plumbers and electricians, should be given direct cash transfers as they do not receive salaries.