The government is looking at a number of measures such as funding, simplified procedures and tax cuts for small, medium and micro enterprises (MSMEs) facing major business disruptions as a result of the second wave of the Covid-19 epidemic, with two government officials aware of the undisclosed development.
It is clear that the second wave has hit the MSME sector even though it is still recovering from the negative impact of the first wave, people have added. Details of the sponsorship package are being processed, they said.
Small firms are suffering because operating costs are unaffordable, officials said. Providing asset support by further expanding the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) and releasing their pending payments (those costing at least ₹ 15,000 crore pending) are two steps to be considered, they added. “About 50% of the pending amount is owned by public sector firms under the Center and states, and that can be disbursed immediately,” said one of them.
The ₹ 3-lakh-crore ECLGS is one of the highlights of the 20 l lakh-crore economic package announced last May that provided additional cash flow in the form of easy-term loans to small firms. The center on March 31 has extended it until June 30, but the industry wants to expand it until March 31, 2022, by receiving another ₹ 3 lakh crore. The matter is still under investigation, said the first official.
Most of the country remains under siege to reduce the second wave. In this case, MSMEs should be encouraged to access the Internet, a second official said that the difference between the essential and the non-essential goods and services which were sold online can be reviewed with a focus on secure delivery to provide a wider online marketplace for MSMEs. Alternatively, the TCS and TDS for e-commerce provision can also be amended to facilitate small firms.
The official said that various measures, including price reductions or rapid refunds, are being considered by MSMEs in TDS and TCS matters. He also said that such TCS and TDS provisions do not apply to offline sales.
Nilaya Varma, founder and CEO of consulting company Primus Partners, said: “MSMEs are among the worst hit by Covid. They have to deal with periodic closures in the provinces, affecting supply chains. While e-commerce would allow for continued operation, policies are disabling online sales in many regions. It is time for decision-makers to examine the fundamentals of distinguishing between what is important and what is not. We could not assemble the electrical switch as a trivial matter, but it would be necessary for someone using an oxygen device. ”