Not more than a month ago, micro, small and medium enterprises in Uttarakhand
, the hill-state of Northern India were bustling with activity, anticipating the tourist season ahead. The region, hit by one of the country's worst natural disasters, now waits to limp back to life.
The average size of Uttarakhand's small and medium businesses is around Rs 4 lakh in annual turnover, according to data released by the Industries Association of Uttarakhand (IAU). And there are about 42,000 of them, most of which exist in scattered clusters of hotels, resorts, tourist services, food processing units and automobile workshops.
The state is gasping for a fresh infusion of economic activity. According to IAU, about 19,590 business units have been devastated. This translates to a total investment loss of over Rs 530 crore. The worst hit businesses belong to Uttarkashi, Rudraprayag, Chamoli, Tehri, Pauri, Almora and Pithoragarh districts. In Pithoragarh alone, over 1,000 small weaving units have been wiped out. More than 43,000 people have lost their livelihoods.
SMEs have been quick to demand help. On June 28, Pankaj Gupta, President, IAU, sent a long list of demands to the Centre seeking rehabilitation of those enterprises hit by the calamity. The demands include an interest rate rebate of five per cent from the central government and an additional five per cent from the state government to bring down borrowing costs which are as high as 14 to 15 per cent.
Besides an income tax and service tax holiday, the industry body has also sought a waiver in the guarantee fee and annual service fee paid to banks by entrepreneurs. This applies to loans under a scheme called Credit Guarantee Trust for Micro and Small Enterprises or CGTMSE. Under the scheme, over 4,512 business units were disbursed loans totaling Rs 137 crore as of March 2013. "This will help reduce the cost of borrowing for people and encourage them to rebuild their enterprises," says Pankaj Gupta.
Another demand put forward by the IAU is the elimination of Minimum Consumption Guarantee Charges, or MCG, paid by small units as part of their power bills. The state government has already responded by announcing that no power bills will be collected until March 14.
Also, micro and small units are demanding priority allotment of fresh land for those who lost their land to landslides. The total loss to property alone is estimated at around Rs 75 to 80 crore.
Restoring livelihoods is a huge challenge the state is dealing with. The government proposes to double the allotment to the Prime Minister's Employment Generation Programme under which 800 projects are currently operational.
"We have lost on agriculture and tourism which takes years to build has been hit severely," says Gupta. He is however hopeful that things will turn around.
The situation might not be all that bleak. The state has a literacy rate of about 70 per cent which can be leveraged. "This is an opportunity to convert Uttarakhand into a knowledge economy," he says. This can be done by providing skills and training to the youth to restore confidence.