NEW DELHI: The 19-day lockdown extension may choke thousands of MSMEs, which account for a quarter of India’s $2.9-trillion economy and employing over 50 crore workers. Experts warn that one-fourth of the 6.9 crore MSMEs may perish with exporters taking the biggest hit.“We believe 25% MSMEs will close permanently,” said D K Aggarwal, president, PHDCCI.
According to Sharad Kumar Saraf, president, Federation of Indian Export Organisations, MSME exporters have no liquidity to pay wages for April. “The start of selective manufacturing will be a long-drawn battle due to the unavailability of labour, raw material and transport,” said Saraf, adding that exporters will be hit in the absence of an effective and sizeable financial package.
FIEO has demanded a comprehensive package that will include interest-free credit to cover six months of wages, rental, utilities along with a six-month loan moratorium for exporters. With over 50% export orders getting cancelled worldwide, 15 million jobs in export units are likely to be affected, FIEO warned.
Sources said commerce minister Piyush Goyal is in talks with the finance ministry to inject funds through various measures to help these companies stabilise their operations over the next few months.“MSMEs do not have the capacity to withstand massive shocks like Covid-19. The health of these MSMEs will have a bearing on the entire supply chain, including large corporates. Therefore, immediate and substantive support measures are needed to see the MSMEs through this crisis,”said Chandrajit Banerjee, director-general, CII.
Prime Minister Narendra Modi’s announcement extending the lockdown without offering any financial aid evoked sharp criticism from the Congress. “No financial package, no details, no concrete item. Neither for poor nor middle class nor industry nor businesses. Lockdown is good but cannot be end in itself! Where is single livelihood issue?” said Abhishek Singhvi.
Rs 10l cr package sought
Industry bodies have sought a sizeable stimulus package to the tune of Rs 9-10 lakh crore aggregating 4-5% of the GDP, with focus on small businesses to weather the crisis