Covid-19 lockdown 2.0: Need govt support to keep units open, say MSMEs

On Tuesday, MSME Minister Nitin Gadkari had stated during a meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest.

Micro, small and medium enterprises (MSMEs) across the country are keeping a wary eye on the government's decision to allow select manufacturing units to reopen on April 20. While MSMEs in most sectors have welcomed the latest move, they argue that lack of financial support from the government might result in these firms not running even if they manage to reopen.

The Confederation of Indian Industry (CII) has recommended focus primarily on increasing the financing available to MSMEs with relaxed collateral norms, an extension of the RBI moratorium and wage support. It also suggested expediting fund of funds for MSMEs which has been under the government's consideration and augmenting the assets of MUDRA Bank.

“Many MSMEs are an important part of larger supply chains and their health has a bearing on the supply chain, including large firms. Therefore, special, immediate, and substantive support measures are required to see MSMEs through this crisis," said CII Director General Chandrajit Banerjee.

To ease the liquidity crisis that most MSMEs had been facing for the last couple of months, Assocham has suggested a 40 per cent government or Reserve Bank of India guarantee on fresh loans, while the balance risk premium can be made up by a huge spread available to banks between their cost of funds and the yields.

On Tuesday, MSME Minister Nitin Gadkari had stated during a meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest. He estimates Rs 40,000-50,000 crore could be injected into the market by releasing the due payments.