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Parliamentary panel asks govt for data on job losses in MSMEs, discusses revival plan

Coronavirus lockdown adversely impacted MSMEs as cash flow dried up; relief measures were announced to help them overcome the situation but many are still struggling

Nirbhay Kumar | August 20, 2020 | Updated 15:52 IST
Parliamentary panel asks govt for data on job losses in MSMEs, discusses revival plan
The MSME sector represents 90% of India's industrial units and contributes to 45% of total industrial value addition

KEY HIGHLIGHTS

  • Parliamentary panel discusses concessional loans to women entrepreneurs, institutional finance for micro enterprises
  • Senior Congress leader and Rajya Sabha member Anand Sharma House chaired the panel
  • The panel has asked the MSME Ministry to provide data on job losses in the sector
  • It was also suggested that interest payments on loans could be waived for six months along with extended time period for loan repayment
  • MSME sector represents 90% of India's industrial units, and contributes to 45% of total industrial value addition

Concessional loan scheme for women entrepreneurs and helping micro enterprises to access bank credit were among the two key suggestions discussed by a parliamentary panel to revive the crisis-hit micro, small and medium enterprises (MSME) sector.  As per the 73rd round of National Sample Survey (NSS), the total number of MSMEs are 6.33 crore and out of these micro, small and medium enterprises comprise 99.47%, 0.52% and 0.01% respectively.  

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While the House panel chaired by senior Congress leader and Rajya Sabha member Anand Sharma on Wednesday noted the suggestions, it asked the MSME Ministry to provide data on job losses in the sector. The MSME sector represents 90% of India's industrial units and contributes to 45% of total industrial value addition. India's estimated 45 crore informal workers comprise 90% of its total workforce, with 50 lakh to 1 crore workers added annually. About 40% of these workers are employed with MSMEs, according to a joint report by Council on Energy, Environment and Water (CEEW), and National Institute of Public Finance and Policy (NIPFP).

Sources familiar with the development said that the House panel chief wanted to understand the impact of pandemic on the sector and the progress made so far after unlocking of the economy.  MSME Secretary AK Sharma who appeared before the parliamentary panel briefed the members on measures taken by the government to help the industry, and also various schemes for the small units.

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The Secretary listed out schemes announced under Atma Nirbhar Bharat package in May by Finance Minister Nirmala Sitharaman.  One of the members of the parliamentary panel expressed concern over micro enterprises not getting institutional credit. The need for boosting demand was another area of focus in the key meeting. It was noted that the benefits of the government schemes were not reaching the micro enterprises.  

It was also suggested that interest payments on loans could be waived for six months along with extended time period for equated monthly installments (EMIs). The MSME sector had earlier demanded payroll support from the government as well as waiver of interest payments. They had argued that many countries provided direct cash support to small enterprises to help them tide over the coronavirus impact, and India too should consider it.

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Surat-based Prashant Industries Director Prashant Patel said that banks may not be in the position to waive interest charges, and hence government should come up with some mechanism to extend interest and collateral free loans against statutory payments made by the industry since the onset of pandemic. "The loans can be repaid a year later without interest," Patel said. 

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