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Govt finalising second economic package, benefits for SMEs likely
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SME Times News Bureau | 02 May, 2020
Prime Minister Narendra Modi has held a series of meetings with key
ministers, including Home Minister Amit Shah and Finance Minister
Nirmala Sitharaman, and top officials of the government to finalise the
second economic package targeted at sectors most affected by the
lockdown to check Covid-19 spread.
The meetings involving Shah,
Sitharaman and other officials of the key economic ministries are taking
place for the last few days and the idea is to get inputs on the impact
of the current lockdown on different segments of the economy and
identify immediate measures that may be required as a relief and revival
strategy, sources privy to the developments said.
As part of
this effort, Modi had met Shah, Commerce and Industry Minister Piyush
Goyal and Civil Aviation Minister Hardeep Puri on Friday. The meeting
was also attended by Cabinet Secretary Rajeev Gauba and the Principal
Secretary to the PM.
Meetings were also held with commerce and
MSME ministries on Thursday. On Saturday, the Prime Minister had a
review meeting with the Agriculture Ministry to deliberate on the issues
and reforms related to the farm sector.
With the government
permitting various economic activities to start from May 4 by dividing
the country into red, orange and green zones, the immediate concern is
to support specific sectors through a package, so that businesses regain
lost ground and economic activities gradually return back to normal.
The government is also looking at giving a boost to the investment
climate through a series of reform initiatives.
Sources said that
the government may take a phased approach in this regard the next set
of stimulus may have a clear focus on the concerns of the SME segments
which have been hit hard due to the Covid-19 outbreak and resultant
nationwide lockdown. Revival of small businesses is a key concern for
the government.
The Finance Ministry has suggested to the PMO to
set up a dedicated fund for micro, small and medium enterprises that
could be used to provide both interest free loans to identified
industries as well as capital support required to bring enterprises back
in business after the lockdown. The size of the fund would be large to
extend help to a large number of entities.
The MSME fund may also
be used to provide interest subvention on loans taken by the sector to
reduce their burden and allow some of these labour intensive segments to
operate smoothly.
"The contours of the package are being
finalised, and the actual timing of the announcement is still to be
worked out. But it would be done soon," said an official source.
Though
the next set of package from the government to fight the disruptions
caused by the Covid-19 outbreak is expected to be much wider to cover
the concerns of the India Inc., particularly the worst-hit travel and
tourism, hospitality and aviation sectors, sources said that the
government may adopt a phased approach to see that only such measures
that immediately benefit a sector during the lockdown are announced
first before looking at measures to bring the economy back on track
after the lockdown.
While talks with the stakeholders have taken
place in different sectors and their needs have been analysed by the
Finance Ministry, it is felt that the MSMEs have been hit hard at
different levels and need support immediately.
There is wide
speculation that the next economic stimulus package could be bigger than
the Rs 1,70,000 crore worth of schemes announced by Finance Minister
Nirmala Sitharaman in late March, focusing on providing food security to
the poor and giving money in their hands to fight the Covid-19
pandemic.
There is also a suggestion to involve five to six big
corporate houses in the production of key items of consumption for the
masses so that the country doesn't face shortages once demand picks up.
This could be done by providing direct linkages of farmers with
corporate entities so that key food produce reaches the factories for
processing and production.
While announcing the last package,
Sitharaman had indicated that concerns of the India Inc. and SME
segments and other sectors of the economy impacted by the present
lockdown may be looked at and the government would come up with a plan
later.
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