BENGALURU: Karnataka, which is looking to jumpstart its economy in terms of construction, industries, manufacturing and services sectors, hopes to cash in on the relief package announced by the Centre, especially those aimed at helping MSMEs and real estate. Chief Minister BS Yediyurappa termed the 15-point relief measures announced by Union Finance Minister Nirmala Sitharaman on Wednesday, to aid DISCOMS, non-banking finance sector, contractors, direct tax and EPF, as a boon to the economic revival of industries and labourers. The Opposition as well as industry, however, is unimpressed.
Karnataka had only last week announced a Rs 1,610 crore package which included relief for industries with special focus on MSMEs. “We are hopeful that the assistance extended to MSMEs will not only help existing units, but also encourage more people become entrepreneurs. Benefits have been extended to every tax-paying citizen with reduced TDS and TCS rates,” Deputy Chief Minister Dr C N Ashwath Narayan told The New Indian Express.
Hours after Union Finance Minister’s press conference, Yediyurappa hailed the assistance being extended. “This is a very timely and well-thought-out move. The collateral-free loans for MSMEs will boost them to resume operations. The Rs 90,000 crore aid to electricity supply companies of the states, income tax exemption and return of Rs 50,000 crore, payment of Rs 6,750 crore towards EPF contribution and Rs 30,000 crore aid for non-banking finance companies will help the industries and employees,” he said.
As part of the Union Finance Ministry’s Rs 90,000 crore liquidity injection plan, loans will be given to DISCOMS (power distribution companies) against State Government guarantees to pay up dues towards power generation companies. “This is a bold step towards motivating people to exit the lockdown and to work and earn their bread,” the CM felt. The Opposition in Karnataka however, was barely impressed with the announcements.
Industry seeks wage support, loans
Though six of the 15 measures announced by the Union government centre around MSMEs, industry voices are unhappy about the assistance offered. “While we welcome the intent of the Atmanirbhar package announced by the Finance Minister, it is grossly inadequate. The lockdown has left the entire business community bereft of cash,” said Devesh Agarwal, president, Bangalore Chamber of Industry and Commerce (BCIC).
BCIC insisted that instead of investing funds in markets and government securities, the government should issue mandatory directions to banks and financial institutions to lend to MSMEs. Karnataka Small Scale Industries Association (KASSIA) went one step ahead to suggest “truly effective” measures instead of those announced on Wednesday.
“Provide payroll support to MSEs by paying 70% of the salaries of these units by using PF/ESI unclaimed funds. Completely waive interest payments for three months, and offer bank finance at 4% interest for the next three months. Increase working capital limit by 40% to MSEs across the board, with reduced rates. Allow relaxation in GST payments for one year. Remove the cap/qualifications for PF contributions by the government already announced. Keep NPA norms relaxed for at least six months. Ease compliance norms for at least six months and suspend penal provisions for the period. Postpone new minimum wage enactments for two years,” said R Raju, president, KASSIA.
K’taka’s promises for industries