Economy

‘Covid stimulus measures have not reached a majority of self-employed and small units’

Our Bureau Chennai | Updated on June 25, 2021

CIA and its 40 partner SMB associations release findings of ‘A Mega Survey’

A majority of small businesses have not benefited from the Covid-19 stimulus packages of the Central government, according to a survey by the Consortium of Indian Associations (CIA), which claims to have taken feedback from 81,000 self-employed and MSMEs.

The CIA and its 40 partner SMB associations, on Thursday, released the findings of ‘A Mega Survey’ that analysed the conditions of over 81,000 Covid-hit self-employed and small and micro businesses (SMBs) across India.

The respondents included manufacturers (49 per cent), service providers (15 per cent), self-employed (14 per cent), consultants, start-ups, and traders, among others.

Three stimulus packages

About 88 per cent of the respondents expressed that the stimulus package announced in the last 15 months did not reach them and that they were not considered for support, revealed one of the findings of the survey. The government of India has introduced three stimulus packages in the last 13 months.

“The reasons could be many and they include ineligibility for segments like self-employed, who may not be qualified for schemes such as ECLGS, inadequate amount in sanctioning, use of loan amount for clearing old dues by the banks which sanctioned the loans, procedural hassles, and stricter conditions, among others,” KE Raghunathan, Convenor, CIA told BusinessLine.

Other highlights of the survey include 73 per cent of SMBs have not made any profit during FY20; 42 per cent were unable to decide on retention of employees; 59 per cent reduced/sacked/removed their staff compared to the pre-Covid period (first wave: 37 per cent; second wave: 22 per cent), and 82 per cent felt that the Central and State governments were not looking after their interests.

The report also discussed the laws related to land use by industries, especially MSMEs, that needed a relook for conducive growth of small units. MSMEs should be allowed to hold titles of their industrial properties on a free-hold basis, so that they can use them for securing loans and other facilities.

Entrepreneurs who sell their residential properties to set up MSMEs should be given exemption under the IT Act. The requirement to secure a separate factory license to set up a factory on a government-approved industrial estate should be done away with because it leads to red-tapism, it said.

The CIA has also come up with a series of long-term and short-term measures that could come from Central and State Governments to help the Covid-hit small units. The suggestions include extension and relaxation in loans, NPA classifications, refinancing options, opening fair price shops for raw material supplies, ban on exports of steel and cement for six months, refund of exporters’ dues since January 2021, exemption of GST rate of 18 per cent for vehicle insurance and medical insurance till March 2022, increase in ECLGS allocation, and relaxation in the norms of eligibility of restructuring.

Published on June 24, 2021

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