TA task force formed by Global Alliance for Mass Entrepreneurship (GAME) said that “If India’s economy should come out well built, around 6 crores micro small and medium enterprise (MSMEs) need an arrangement of immediate reliefs ranging from small run liquidity to simple compliance.”
The task force, chaired by K P Krishnan and co-chaired by Ravi Venkatesan, founder GAME, said if there is no access to loans or active support from government and industry bodies quite one-third of those small-scale businesses could see extinction.
On Saturday as per recommendations by GAME, the MSME sector, which contributes around 25 percent of the services Gross Domestic Product and 33 percent of the manufacturing output, has to be communicated well about the schemes and therefore the stakeholders should mandate 30 percent of the stimulus package to be released to enterprises falling into the micro and little categories and relax norms so that borrowers can repay loans during a longer timeframe and permit exemption from bank guarantees.
GAME said these businesses were struggling even before Covid-19 and would want financial and compliance-related reforms by the government to bridge over the pandemic crisis. “A majority of MSMEs in India were already struggling to deal with demonetization, GST, and a slowing economy when Covid-19 hit the country. Various steps announced by the government will at least reduce the pain for them if not eliminate. The small businesses should be provided with a clear understanding of fiscal stimulus and better distribution of the dedicated funds said by Krishnan.
Among other suggestions, the task force has recommended if there may well be 1 lakh crore worth of recent loans to the primary time MSME borrowers. GAME said, “This could include Rs 1 crore loans, each with a ticket size of Rs 1 lakh with a credit backstop by the government.” On 1 June, around Rs 20,000 crores has been given to eligible MSME customers who fall under the scheme.
Administering the fund by SIDBI, a development financial institution could be few key execution plans proposed for the loan corpus; following a simple and rule-based claim process; providing loans at lower interest rates among other things.