According to the Annual Report of the Department of MSME published in September 2019, there are 6.34 crore MSMEs in India.
The COVID pandemic has left an enduring impact on the economy. Global supply chains are affected, imports and exports are hindered, and unemployment is rising in. Across the world and India, Micro, Small, and Medium Enterprises (MSME) have been affected very badly.
Thousands of stranded and jobless migrant workers across the country are proof of how MSMEs have seen the worst victims of the Covid-19 pandemic.
MSMEs: Backbone of the Indian economy
Micro, Small, and Medium Enterprises (MSMEs) play a major role in India’s economy. This sector adds to a huge 30 percent of India’s GDPand employs an estimated 28 percent of the labour force. Theysupport the livelihoods of over 100 million people. Estimations imply that the sector generated around 13.5 million to 14.9 million new jobs per annum between 2015 and 2019 standing as the backbone for India.
The Government of India needs to prioritize the MSME sector’s survival and recovery. However, this needs a collective effort from the government and the businesses to survive and revive post-crisis. The action includes:
i) Bailout packages
The government is already thinking of a bailout package for the sector. With reports indicating that a proposal to guarantee Rs 3 trillion of loans to small businesses. Union Ministery MSMEs has also indicated that a corpus of Rs 10,000 crore is on the way to buy up to 15 percent equity in MSMEs with a high credit rating.
MSMEs also need more widespread and intelligent measures to be able to help smaller companies.
ii) Make easy loans available
To ensure the survival of medium and small-scale enterprises over the next few months, it is imperative to provide the much-needed liquidity to keep their basic operations running. It is time to make easy and low-interest loans available to the MSME sector immediately. The loan amount available for each organization must be equivalent to at least two to three months of operational costs.
Various steps were taken for the Revival and Prioritising Indian MSMEs due to the COVID-19 Pandemic :
The Ministry of MSME implements various schemes and programs for the growth and development of the MSME Sector in the country. These schemes and programs include Prime Minister’s Employment Generation Program (PMEGP), Scheme of Fund for Regeneration of Traditional Industries (SFURTI), A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE), Interest Subvention Scheme for Incremental Credit to MSMEs, Credit Guarantee Scheme for Micro and Small Enterprises, Micro and Small Enterprises Cluster Development Programme (MSE-CDP), Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS).
Recently, Government has taken several initiatives under Aatma Nirbhar Bharat Abhiyan to prioritize the MSME Sector in the country especially in the Covid-19 pandemic. Some of them are:
i) Rs 20,000 crore Subordinate Debt for MSMEs.
ii) Rs. 3 lakh crores Collateral free Automatic Loans for business, including MSMEs.
iii) Rs. 50,000 crore equity infusion through MSME Fund of Funds.
iv) Newly revised criteria for the classification of MSMEs.
v) New Registration of MSMEs through ' Udyam Registration' for Ease of Doing Business.
vi) No global tenders for procurement up to Rs. 200 crores, this will help MSME.
An online Portal “Champions” has been launched on 01.06.2020 by the Prime Minister. This covers many aspects of e-governance including grievance redressal and handholding of MSMEs. Through the portal, a total of 18,723 grievances has been redressed up to 09.09.2020. RBI has also announced several measures to Reduce the Financial Stress of MSMEs.