Credit and Finance for MSMEs: Around over 60 million MSMEs are “in real danger” with “more than 92 per cent drop in domestic sales compared to the same time last year, over 100 per cent drop in export sales compared to the same time last year.”
Credit and Finance for MSMEs: Even as the Finance Minister Nirmala Sitharaman had announced a couple of incentives last week to help MSMEs struggling to operate amid lockdown and the Coronavirus pandemic at large, the latter have sought more sops from the government to sustain through the current situation. World Association for Small and Medium Enterprises (WASME), which has over 2,000 MSME members, urged the government for clearing delayed payments within 15 days. “All government departments should clear all pending payments to MSMEs within 15 working days. MSMEs should also be granted additional loans on-demand or existing limits should be increased to help them tide over the liquidity mismatch,” Sanjiv Layek, Executive Secretary, WASME told Financial Express Online.
In a letter written to the Prime Minister Narendra Modi on Monday, the association said that situation could worsen without government intervention. Around over 60 million MSMEs are “in real danger” with “more than 92 per cent drop in domestic sales compared to the same time last year, over 100 per cent drop in export sales compared to the same time last year.” According to a report by Directorate General of Commercial Intelligence and Statistics (DGCIS), MSME export share in India’s total exports for FY17 — FY20 (April-August 2019) period was 49.69 per cent, 48.56 per cent, 48.10 per cent, and 49.66 per cent respectively. “Lockdowns and social distancing, critically required as they are, have strangulated demand, disrupted supply chains,” said WASME.
Layek said the government should accelerate the issuance of funds under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with the turnaround time reduced to seven working days.” FM Sitharaman had last week announced that government would bear the 24 per cent contribution of both employee and employer combined to the Employees’ Provident Fund for the coming three months. The move will help MSMEs in managing cash flows and liquidity. The minister had also earlier announced raising the threshold for default by MSMEs sharply from Rs 1 lakh to Rs 1 crore that would “by and large prevent triggering of insolvency proceedings against MSMEs,” the Finance Ministry had said in a press note.