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Need for all-round package deal to place life again into MSMEs, suggests FICCI; lists measures for govt, RBI

Finance Minister Nirmala Sitharaman had introduced a slew of measures in March to offer respite to companies together with small companies.

Credit and Finance for MSMEs: Micro, small and medium enterprises (MSMEs), which have a share of round 29 per cent in India’s GDP, have been bruised and battered by the Coronavirus outbreak and the next lockdown. To present a thrust to the MSME sector, commerce affiliation FICCI in its newest spherical of Business Confidence Survey advised the federal government few measures to spice up liquidity and employment. A monetary package deal for your complete trade, particularly MSMEs, is required “in the form of subsidies, policy support, tax holidays, special dispensation of funds to sustain employment levels before Covid-19 pandemic etc.” FICCI advised authorities.

“Nobody knows when the current situation will improve. MSMEs mostly have old employees and they don’t want to let them go. But at the end of the day whatever they are paying is coming from their own savings. They don’t have so much wealth to payout. So first thing is to provide MSMEs loan as you need to be available,” Archana Garodia Gupta, a small enterprise knowledgeable and former National Chair, FICCI MSME Committee advised Financial Express Online.

Among different key options made to the federal government included direct money profit to be prolonged to MSMEs with out difficult paperwork and offering help to MSME distributors by enhancing procurement from them.

Also learn: New GST return: Here’s the whole lot MSMEs should learn about types, previous vs new returns, points in new system

Finance Minister Nirmala Sitharaman had introduced a slew of measures in March to offer respite to companies together with small companies. For occasion, rate of interest minimize from 12 and 18 per cent to 9 per cent charged on delayed funds of superior tax, self-assessment tax, common tax, TDS, TCS, equalization levy, securities transaction tax, commodity transaction tax made between March 20, 2020, and June 30, 2020. The minister had additionally prolonged the GST return submitting date for FY19 from March 31, 2020, to the final week of June 2020.

FICCI additionally advised the RBI to direct banks to reinforce credit score restrict by at the very least 25 per cent with out asking for collateral safety. “Further, the need for collateral for MSMEs and startups must be completely done away with for some time,” it stated within the survey. The affiliation additionally advised banks to “enhance funds available to the industry especially small and medium scale industry.”

“Most MSMEs have accounts with banks. The government should designate up to 25 per cent of the current cash credit limit as special Covid fund and let it guarantee that money to the bank. It is alright to give a sop to the bank as it makes them more inclined to lend as banks are usually reluctant to lend even if they have funds,” stated Gupta. In order to ease liquidity amongst MSMEs, RBI had final week stated that it’ll conduct long-term repo operations (TLTRO) of Rs 50,000 crore with at the very least 50 per cent of the quantity availed going to small and mid-sized NBFCs and MFI, the RBI governor Shaktikanta Das had stated.

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