Despite the measures announced by the Union Finance Minister and the Reserve Bank of India, the MSME (micro, small and medium enterprise) sector is clueless about how to pay salaries, raise funds in view of the lockdown.

Many MSMEs expect a few more announcements to relieve their woes as they account for about 25 per cent of the commercial credit exposure of banks, according to March 2019 numbers.

“The immediate challenge of MSMEs will be to pay their statutory dues, wages and pressing creditors in addition to the bank dues, says G Karthikeyan, a Coimbatore-based Chartered Accountant.

MSMEs have urged the government to support them in paying salaries by giving special soft loans which can be paid back in equal instalments starting September.

Co-Convenor, MSME Panel, CII-Tamil Nadu, X Arokianathan said, “MSMEs are not able to open their offices due to which payment of salaries is a problem. Required documents are stuck in offices and permission to go to offices needs to be given (of course, this also defeats the purpose of the lockdown). Daily wages have to be paid to textile workers; payment for the lockdown period has become a big question mark. Wages can be paid by ESIC.”

He had also interacted with industry representatives two days ago. During the interaction, the representatives had pointed out that the government was supporting MSMEs by paying ESI/PF contribution. This facility should be extended to all SSIs instead of limiting it to units with 100 employees. As 90 per cent of employees’ salary is less than ₹15,000 a month, small scale units employing 300-400 persons and paying more than ₹15,000 should not be penalised.

Employees’ salaries during the lockdown period should be covered under the ESI Scheme and in the meantime salaries paid by SSI units for the lockdown period shall be considered as ESI credit to be adjusted for future ESI payments, they had said.

Karthikeyan felt that bankers will have to play a significant role in this crisis. The Government and the RBI need to infuse confidence among bank managers and monitor banks to ensure that the funds are deployed appropriately. “At this point in time, a risk-averse, conservative approach by public sector banks will only worsen the situation,” he added.

Meanwhile, SME industry representatives suggested that the government consider allowing payment of GST arrears in instalments along with the current due, with a 6-month moratorium without cancelling the GST registration. They want penalty/interest waived for the delayed payment. Some SME Associations have urged the government to allow units that have the facility for social distancing to operate, especially if the lockdown is extended .

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