Hyderabad: MSMEs are now in a restarting phase. The growth has been dwindling for some time now and the lockdown has only further aggravated it. There are five pillars that need to be focused by the government in this restarting phase- liquidity, labour, labour reforms, generic reforms and sustainability.
When it comes to liquidity, the issue has been addressed through equity infusion, fund of funds and other channels. “While liquidity is being enhanced significantly on paper, efforts should be made to implement the measures announced in the package faster. Also, it should be made available at lower rates and the accompanying costs should not be passed on to the end users. We also need a moratorium on the payments,” notes Muralidharan Thyagarajan, chairman, TMI Group.
The next pillar that needs focus is labour. Migrant labour moving away to their native places has highlighted how we have ill-treated them. We should have taken better care of them. They have a key role in building the economy back.
Many labour laws are passed despite them being pending in the labour courts. The minimum wages paid to the labour should be enhanced to keep the labour engaged. Most of the time they are being exploited and this should stop. The compensation element should be increased significantly.
There is a need for generic reforms. Some of them have been achieved. For instance, changing the definition of MSMEs. It has been a demand for at least a decade. There is an inflation value which has to be taken into consideration. Over time, the actual value will change. Henceforth, there should be a review of the definition at least every two years.
He said, “The Government is simply asking to take more loans and survive. It is pushing people and enterprises into a bigger debt trap. No lender will lend to those who do not have capacity to repay. No ways have been mentioned in the package to reduce the debt, costs incurred or the losses that happened due to the pandemic.”
What we need is grants, we need methodologies and this has to be done.
While there are loans-in-59 minutes for the urban dwellers, there is no such mechanism for farmers. There is a need for online platforms where farm data is available. Government should launch this platform so that farmers also have access to debt.
The Government has only said take loans to survive. We should take loans and not pay and see what happens.
The package announced by the Finance Minister at the best is only Rs 1.5 lakh crore to Rs 2 lakh crore and not Rs 20 lakh crore as is being announced. However, on the other hand, the structural reforms announced by the Government are good. Government opened the door, Thyagarajan added.
Government is bankrupt now and it has no option but to borrow. It will get money if the economy improves, gets higher tax collections.
Where is the money to fund the package?
The actual stimulus component is small. Government has actually not given anything. There is no reduction in the cost structure or means to cope with the losses that have happened due to the lockdown.
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