‘Despite relief package, MSMEs still grappling with problems,’

Even after the credit and finance special relief package for MSMEs announced by Finance Minister Nirmala Sitharaman, the small and medium industries continue to face major challenges such as absence of demand due to disruptions in consumption, investment expenditure and hurdles in production at various levels of industry.

“Supply chain disruptions have made it difficult for industries to renew the production process and or reduce inventory,” said. KB Arasappa, President, Karnataka Small Scale Industries Association (Kassia). Arasappa spoke to the Finance Minister to discuss issues that are of serious concern to the MSMEs.

As the pandemic continues, the moratorium already provided for the MSMEs is found to be inadequate and needs to be extended. MSMEs find it extremely difficult to comply with the GST returns filing and payment process due to disruptions in business and absence of cash flows. Often the orders get cancelled and buyers default on payments putting the small enterprises in great difficulty.

The schemes announced by the Government often prove to be difficult to access at the bank level due to the rigid postures adopted by the lenders ignoring the ground realities.

“In these circumstances, we would like to request that you kindly consider the following measures to stimulate demand in the economy so that MSMEs can revive their operations, post pandemic,” the Kassia President said.

Infra spend

He said: “We believe that the Government must step up expenditure on infrastructure which will help not only create and improve the existing infrastructure but generate employment and raise demand for SMEs products and services.”

Kassia insisted that both Central and State Governments step up expenditure on public works.

Investments in critical health infrastructure and urban housing and slum development will help create considerable employment and demand for products and services.

“We would also request the Government to inject cash into micro and small enterprises by means of direct payroll support to such enterprises till the end of the financial year and request that interest rate on bank loans be reduced to 6 per cent for a period for MSMEs,” said Arasappa.

“On the lines of the PF payment made by the Government, the Centre may also consider payment of ESI contributions on behalf of the SMEs so that this will take out the stress of cash outgo on those enterprises to an extent,” he pointed out.

The Government must also involve the co-operative banks in extending the ECLGS loans to enterprises to help the rural industries and also widen the distribution network.

The export related units need relaxation in terms of NPA norms to enable them get necessary credit to fulfil commitments on exports.

The Government must consider SMA-2 units for funding under the ECLGS scheme, reduce GST rates and ease compliances of returns filing etc, in view of the disruptions.

It must consider payment of rent and utility bills of micro and small enterprises through direct cash injection for a period. Moratorium on repayment of loans needs to be extended till the financial year-end. Banks must relax repayments further with a grace period, Kassia said.

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