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Panel raps govt. over MSMEs, urges larger economic package

Parliamentary committee moots steps to boost cash flows for micro, small units

A Parliamentary panel has pulled up the government for offering inadequate relief measures for micro, small and medium enterprises (MSMEs) that were worst-affected by the COVID-19 pandemic. It mooted fresh measures to help them stay afloat, including a doubling of the 90-day limit for banks to classify their loan dues as problematic.

Offering loans and long-term measures — as the government had done over the past year — instead of improving the cash flow to generate demand as immediate relief, have put small enterprises in a grim situation, the panel said in its report tabled in Parliament on Tuesday.

The second COVID-19 wave this year ‘even more vigorously ripped the economy, particularly the MSME sector’ just as it was recovering from the initial lockdowns of 2020, the panel said.

“The Committee, therefore, recommends that the Government should immediately come out with a larger economic package aimed at bolstering demand, investment, exports and employment generation to help the economy, including MSMEs to recover from the pandemic fall-out,” said the report of the Department-related Parliamentary Standing Committee on Industry.

Chaired by TRS member of parliament K. Keshava Rao, the committee’s report sought a detailed study of the actual losses suffered by small enterprises since the onset of the pandemic,noting that no such intensive assessment had been done by the MSME Ministry.

A national evaluation of units funded by the Prime Minister’s Employment Generation Programme (PMEGP) found that 88% of beneficiaries had been negatively affected by the pandemic, the Ministry informed the panel, adding that small businesses were worst hit.

Arguing that most policies were formulated keeping medium and large enterprises’ benefits in mind, the committee said the position should be ‘contrary’ with a focus on micro and small enterprises, that constitute most of the MSMEs.

“The stimulus package announced by Government last year could not percolate down properly to the lower levels of MSME sector. The Committee feels that extra efforts need to be taken on this front,” it concluded.

While the government’s assurance last May, under the Aatma Nirbhar Bharat programme, that MSMEs’ dues would be cleared by central public sector firms within 45 days, yielded ‘some positive results’, the committee observed that many firms had still not released payments. Recommending stricter penal provisions for delayed payments, the panel stressed that MSMEs work on thin margins and limited cash flows.