Congress president Sonia Gandhi in a letter to Prime Minister Narendra Modi has requested his urgent intervention to pull the micro, small and medium scale enterprises (MSME) back from the brink that they have been pushed to due to the lockdown.
Ms. Gandhi wrote that if this economic concern is ignored it has the potential to have a devastating and expansive ripple effect on economy. She said the sector contributes one third of the GDP and accounts for 50% of exports.
Also read: Coronavirus | BJP spreading communal virus, says Sonia Gandhi
“At this moment, without appropriate support, more than 6.3 crore MSME stand on the verge of economic ruin,” she said. Every single day of the lockdown comes at a cost of ₹30,000 crore to the sector with declining sale orders and a complete cessation of work.
“The government needs to introduce a series of measures to meet this crisis head on or risk a much large economic crisis down the road,” Ms. Gandhi said. She has recommended a five-step measure to help the sector. First, she asked Mr. Modi to establish an MSME Wage Protection Package of ₹1 lakh crore. “This would go a long way in shoring up these jobs, boosting morale as well as greatly alleviating the predicted economic spiral,” she wrote.
Also read: Coronavirus lockdown | BJP terms Sonia Gandhi statement petty politics
She has also urged the government to introduce a credit guarantee fund of ₹1 lakh crore to provide liquidity and ensure adequate capital is available when they need the most.
She also asked for the RBI’s intervention to prompt the banks to ensure adequate, easy and timely credit supply.
“The RBI moratorium on loans should be extended beyond the stipulated three months period. The government should also explore a waiver/reduction of taxes and other sector specific measures.”
High collateral security is leading to denial of credit and the limits on margin money are extremely high. These factors combine to ensure a lack of access to avail credit and must be addressed.
“The government has acknowledged the MSMEs to be the backbone of our economy. It is time it takes measures to ensure the revival and strengthening of that backbone. Timely and decisive action can make all the difference,” Ms. Gandhi wrote.
