2020-05-23T13:39:42
By SolutionBuggy
The lockdown has wavered the Indian Economy and GDP growth has plummeted abysmally. The lockdown in India has affected the daily wage workers and small businesses so severely that businesses were in the doldrums. With their reserves being used up, they had an operational fund deficit. For the small business to survive, to get back on their feet, and to be able to re-start their business, remuneration was necessary to help them cope up with the damage, and support from the government, in the form of an economic package, was imperative for the revival.
This package, therefore, is to help the poor and MSME to get back on their feet. Measures taken are to remediate the MSMEs for the loss that occurred as well as an initiative to restart them. The break-in supply chain had affected the market severely. In order to overcome this, the Government of India(GoI) has released economic packages which can see the survival & growth of MSMEs in India. This will further ensure continuity in the supply chain and encourage businesses to evolve and hence transform the Indian market into a global market.
MSMEs make up for 45% of the country’s total Manufacturing output, 40% export, and contribute 30% to the national GDP. The prolonged lockdown has acutely disrupted the operations of MSMEs and is much in need of operational liability. In order to help the MSME rehabilitate further encourage increased initiative towards starting MSME, numerous liquidity measures have been announced by the government. Up to 3 lakh crores collateral-free automatic loans are to be disbursed for Businesses. Banks and NBFC provide emergency credit lines to MSMEs up to 20% of their outstanding credit. Interests being capped, tenure of 4 years, and a moratorium on principal up to 12 months. Apart from fund availability, GoI has also ensured debt and equity facilities for stressed MSMEs.
The definition of MSMEs has always held-back businesses from growing. Businesses fear that increasing their business will cause them to grow out of their defined business size. This will ultimately result in the loss of their entitled benefits. Hence, the businesses have always made sure to stay within their business size to avail benefits. To be able to help them grow out of fear, GoI has revised the definition of MSMEs. The new definition would eradicate the fear and would give enough space for the business size to expand as well as enjoy the benefits entitled to them. This way, there would be no hesitation for business owners to increase their business, to cross the line to achieve higher targets.
Finally, the government has also taken a stern step to disallow global tenders up to 200crore. This enables MSMEs to have abundant opportunities as they have always faced unfair competition due to the global market. The government will now seek their procurement from MSMEs as they can now actively participate in government purchases. This would further facilitate the mission ‘vocal for local’. With available liquidity, the revised definition of MSME as well as opened business opportunities, MSME can look forward to expanding and increasing their business. Ultimately enabling India to be a self-sufficient market as well as a global market.
Although the economic package has been released as a commissioning or survival package for the industries, the intention is however to see higher returns in the future. The government should however ensure the policies and schemes are being monitored and executed efficiently. Hence, measures must be taken to support financial sectors. The government might have to step in again to revive the growth through demand stimulus. The upcoming quarters would show growth to be negative but from the fourth quarter the recovery might be expected. The economic package is likely to be advantageous and would help the MSME grow. Businesses might have to take the initiatives to make optimum use of the available schemes and benefits to overcome the incurred loss and to achieve a growth rate in the coming quarters.
Copyright © 2024 SolBuggy. All Rights Reserved