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Economic relief package ill-considered and farce: Industry Bodies

By Praveen K Singh

New Delhi: Prime Minister Narendra Modi’s emphasis on ‘Atmanirbhar Bharat Abhiyan’ – an economic relief package worth Rs 20 lakh crore for a ‘self-reliant’ India, has thwarted the spirit of traders, businessmen as well as the micro, small and medium enterprises with several industrial bodies terming it as farce.

Elaborating the relief packages for the various operators and business entities under

MSME sector as part of Rs 20 lakh crore stimulus to triumph over coronavirus crisis and boost economy, Finance Minister Nirmala Sitharaman on Wednesday announced Rs 3 lakh crore collateral free automatic loan saying it will benefit 45 lakh small businesses. The loan will have a four-year tenure and also a 12-month moratorium in repayment.

The Finance Minister pronounced that Rs 20,000 crore subordinate debt for stressed MSMEs which would cover 2 lakh businesses. The smaller firms, however, expressed disappointment and said that they were expecting salary support for their workers and staff in the absence of cash flow which is expected to remain minimal as orders have dried up and demands plummeted.

According to Animesh Saxena, president of Federation of Indian Micro and Small & Medium Enterprises (FISME), industry is on ventilator and needed oxygen support and not medicine, which will work in three months. “We needed oxygen and immediate ventilator. If I talk in medical terms, most of MSMEs need ventilator. If they are not given benefit and immediate support they will not survive 3-4 months of no business,” he said.

Explaining the numerous challenges and failure of government to thoroughly comprehend the issues, he said that government is not shelling out any money and all the announcements are seeking to provide indirect help. “We are clearly disappointed. At the end we are seeing that it is only loan without guarantee. Rest all is frivolous. In this kind of crisis with mounting losses and no business we were expecting that government will come with direct support,” the FISME President said.

On extending provident fund (PF) benefits for another three months, Saxena said the scheme does not cover a large number of MSMEs. In the previous stimulus package, Finance Minister Nirmala Sitharaman had announced the government would contribute employers as well as employees’ share of PF for three months beginning March. This has now been extended by another three months till August. This PF benefit is applicable to all only those establishments which have up to 100 employees and out of which 90 per cent earn a monthly salary of less than Rs 15,000.

GRAPPLING WITH CRISIS

Describing the loan offer and other proposed benefits as attention-grabber and a joke on the economy, SME Chamber of India President Chandrakant Salunkhe said that only financially sound MSMEs would benefit from the collateral free loan and those struggling would just shut down.

“Only those MSMEs which are capable would qualify for fresh loan and those who are grappling with the crisis will eventually close down,” Salunkhe said, adding that such government announcements are not properly implemented on ground. “We were expecting at least two months’ salary for the employees to be paid by the government,” explained Salunkhe.

Addressing one of the long-pending demands of the MSME sector, Sitharaman on Wednesday widened the definition of MSMEs revising the investment limit upward and adding the criteria of turnover into it. The distinction of manufacturing and services sectors have also been done away with. Accordingly, firms with investment of less than Rs 1 crore and turnover of less than Rs 5 crore would be classified as micro units. Those firms with investment in plant and machinery of less than Rs 10 crore and turnover of less than Rs 50 crore would be treated as small enterprises. Firms with investment of upto Rs 20 crore and annual turnover of Rs 100 crore or less would be classified as medium enterprises.

Acknowledging that Indian MSMEs and other companies often face unfair competition from foreign companies, the government has disallowed global tenders in public procurement upto Rs 200 crore. The Finance Minister also announced the release payment of long-pending MSME dues from government and its PSUs within 45 days. FISME’s Saxena said that payments from PSUs and government agencies should be a regular phenomena.

OPPOSITIONS’ ANTAGONISM

Congress leader and former Finance Minister P Chidambaram said the Congress “will also carefully examine who gets what? And the first thing we will look for is what the poor, hungry and devastated migrant workers can expect after they have walked hundreds of kilometres to their home states.” He also tweeted, “We will also examine what the bottom half of the population (13 crore families) will get in terms of real money.”

“Financial package should have been announced earlier. It is not clear what is in the package for laborers, farmers, traders, and MSMEs,” said Chattisgarh Chief Minister, Bhupesh Baghel.

Congress leader and spokesperson, Randeep Surjewala, reacting sharply to the PM’s announcement said the country is “deeply disappointed by your utter lack of empathy” towards migrant workers, who need “compassion care & safe return.”

Congress national spokesperson Abhishek Singhvi said that the Rs 20 lakh crore package has been announced by the same person who has already made many such big announcements. “Let’s see how much of this actually translates on the ground,” he tweeted.

Taking a dig at PM Modi, Congress leader and MP Shashi Tharoor said that the old ‘Make in India’ campaign was being repackaged as ‘Atmanirbhar Bharat’.

Echoing the demand for details on the package, Rajya Sabha MP and Trinamool Congress leader Derek O’Brien, in a video message on Twitter said, “he said 20 lakh crores, 10 percent of GDP but little asterisk there saying ‘some conditions apply’ because we saw no details.”

“We saw the box today, we saw the wrapping paper today but what’s in the product? We don’t know. For that we have to open the package tomorrow or day after,” he added.

AAP Asks if There Are ‘Hidden Adjustments.’

Aam Aadmi Party MLA Raghav Chadha, commenting on the package, asked if “there are any other hidden adjustments?”

Questioning the government’s net cash flow, Chadha stated that if the Reserve Bank of India’s liquidity adjustments for March and ‘comfort to mutual funds in April’ are part of the package then “it has already reduced to 15.75 lakh crore”

ANTIPATHY AMONG INDUSTRIALISTS

The business community embraced Prime Minister Modi’s speech with cautious optimism, with Anand Mahindra describing the pivot towards local industries as “an opportunity to change the narrative from ‘Survival’ to ‘Strength.’”

Describing the announcements as a “timely lifeline”, RPG Group chairman, Harsh Goenka said the PM “has given a powerful booster dose for the Economy”.

Prime Minister Narendra Modi’s address to the nation on Tuesday evening, in which he announced a Rs 20 lakh crore economic package and spoke of “lockdown 4”, has been shredded by the opposition Congress, Trinamool Congress and the BJP’s estranged ally Shiv Sena. Most of the leaders zeroed in the lack of details on either and criticised the Prime Minister for not addressing the issue of migrant labourers, whose plight during the lockdown has left a lasting image.

The package was welcomed by only one Congress leader. “Better late than never,” said Rajasthan Chief Minister Ashok Gehlot, whose state, among others, is awaiting a fiscal stimulus from the Centre.

Congress’s Abhishek Singhvi pointed out that the Prime Minister had only mentioned the 20 lakh crore figure but failed to give details. The Prime Minister had left the task to Finance Minister Nirmala Sitharaman.

He also expressed doubt about final shape and size of the package – a suspicion shared by his party’s Maharashtra ally, Sharad Pawar’s Nationalist Congress Party.

“If substantially, concretely, new proposal is 10 pc of GDP, it would be great. Both God and devil lie in details, not available. 10 pc should be additional, not counting old pre corona schemes,” Mr Singhvi tweeted.

The Nationalist Congress Party said the package “should not go the Bihar way”.

CONCERNING COMMONERS

“Let’s see how it unfolds. We will wait for the details. But it should not go the way Bihar’s package went,” Maharashtra Minister and NCP national spokesperson Nawab Malik said, referring to the relief package announced for Bihar in 2015. The mega package was announced ahead of the 2015 election and opposition parties have repeatedly questioned how much of it materialised.

The Prime Minister said that the package, estimated to be around 10 percent of the GDP, is intended to help fight the COVID-19 pandemic and boost India’s local economy. The PM also stressed on the use of country-made products in a bid to provide an impetus to small and local businesses.

The Prime Minister added that the economic package of Rs 20 Lakh Crore, which translates to about $2.66 billion, will boost medium and small businesses as well as India’s middle classes.

To understand the entire scenario, MSMEs which say government wants them to take loan and pay for all running expenses while there is no business. Layers of Rs 20 lakh crore package has started coming out. Hear them out in their own words.

In 2014, we had heard of Make in India. After six years, call was made today for making India self-reliant. Did we go backward in these years. The slogans explain. It was also said that all our demands during the crisis were met locally. We wonder why then Air India and SpiceJet were bringing medical supplies from China.

Coming on package, if government is so keen to help people the biggest help would be reduction in diesel price. It will immediately bring down the cost of essential items like veggie, dal, rice and other essential goods.

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