- MSMEs want the government to classify firms as fully dead, near dead, critically injured, minor impacted and no impact establishments
- Terming the Rs 3 lakh crore emergency loan scheme as non-starter, the consortium has proposed to widen the coverage to include more MSMEs
- Only 10% disbursals have taken place so far under the Emergency Credit Line Guarantee Scheme (ECLGS)
- MSMEs urge the government to not decriminalise cheque bouncing
A group of 25 MSME associations has urged the government to widen coverage of the Rs 3 lakh crore emergency loan scheme and classify struggling firms as fully dead, near dead, critically injured, minor impacted and no impact establishments for targeted policy action. "Those who are dead need honourable exit, those who are near dead require ventilator support. General treatment or solution can only be a First Aid and cannot yield permanent solution," says K.E.Raghunathan, Convener of the Consortium of MSME associations.
The associations have proposed to halve the income tax rates to 15% for proprietors and partnership firms to help them survive the Covid crisis. They have also suggested goods and services tax (GST) exemption to small enterprises with upto Rs 5 crore annual sales. The newly-formed group of MSMEs claimed that only 10% disbursals have taken place so far under the Emergency Credit Line Guarantee Scheme (ECLGS) announced by Finance Minister Nirmala Sitharaman over a month ago.
It proposed to change the eligibility criteria for collateral-free loans to cover all the firms which had not been classified as non-performing assets (NPAs) by banks as on March 22, 2020. It also suggested that the emergency credit should be offered without banks insisting for additional documents. "This will help those who need money to avail it at this crucial juncture," Raghunathan said.
The emergency credit scheme currently covers existing borrowers with outstanding credit limit of up to Rs 25 crore as on 29 February 2020 and a turnover of up to Rs 100 crore. The borrowers are eligible for upto 20% of their entire outstanding loans as emergency credit line. All India Manufacturers' Organisation (AIMO) National General Secretary Kenny Ramanand said that it is important to save 35% of MSMEs in various sectors such as auto, construction, travel and tourism.
The MSME sector, which is considered among the worst-affected by the Coronavirus-triggered economic crisis, also urged the government to not decriminalise cheque bouncing stating that fear of being punished has made this become an accepted mechanism of doing business. The consortium of trade associations have launched the 'Save MSME' campaign and have proposed to the government a slew of measures to revive the sector.