Due to the Coronavirus pandemic, a nationwide lockdown has merely affected the economy of the country. To handle the situation PM Narendra Modi has announced a relief package of Rs 20 lakh crore as part of the Atmanirbhar Bharat Abhiyan. The primary goal of the package is to benefit the MSMEs through financial assistance. The package is helpful for many industries including the automobile sector. Because most of the automobile component manufacturers are MSMEs (Micro, Small & Medium Enterprises).
This program will empower Indian automakers to reopen business and strengthen the supply chain. It will help Indian companies to expand their businesses and reduce their dependence on parts from other country automakers. The government has taken a number of steps to start the supply chain in the market again. Due to the increased liquidity, the government will help to stimulate market sales in India.
The Prime Minister of our country Narendra Modi has regularly explained that a self-reliance India survives on five pillars:
- First is the economy of the country, that brings a quantum jump in the growth of the country
- Second is the Infrastructure, which represents the identity of the country to the world
- The third is the system which is based on 21st-century technology-driven alignments
- Fourth is the vibrant Demography, which is a source of energy for self-reliance India
- The fifth is to improve the power of the demand and supply chain to its full potential
The major problems faced by Indian MSMEs
Lockdown in India due to crises has decreased the demand and supply chain in the market. Micro, Small, and Medium Enterprises play a big role in the growth of the economy of the country. It handles the exports with a large margin by supplying 45% and 40% of industrial production. MSME s responsible for the employment of over 60 million people. It generates over 1.3 million jobs yearly and produces over 8,000 quality products for the Indian markets. There are more than 30 million MSME units in India and it is expected to join the 12 million more in the next few years.
The MSME sector in India is facing a lot of challenges and a lack of support from the government. Many government departments such as banks, financial organizations, and corporates have become a barrier to the growth of the MSME sector. The limited resources, wealth, knowledge, and availability of suitable technology are some of the significant issues in this sector. Many other concerns around this sector are unproductive marketing strategy, restrictions on modification and expansion, and the lack of skilled workers at suitable prices. It is very important to empower the MSME sector by allowing the use of human and financial resources.
It is necessary to adopt various strategies to address the challenges faced by the MSME sector. It is important to gain business opportunities and to promote and support the MSME sector in India.
How the package is going to improve the Indian economy?
As the entire world is going through an unacceptable pandemic, the Indian government has taken various steps to restrict the spread of the coronavirus. One of the steps taken by the government is a nationwide lockdown. Due to which a large group of daily wages affected badly. Therefore, Finance Minister Nirmala Sitharaman has announced a package of 1.7 lakh crore for the poor community to resolve their financial problems. The government will also give Rs 20,000 crore as subordinated debt to provide financial assistance. The government will give Rs 4,000 crore to the Credit Guarantee Fund Trust for Micro and Small Enterprises which will ensure partial credit guarantee support to the banks.
Banks will provide debt for the MSME owners which are issued as an investment in the sector. It is expected that about two lakh sector units will be benefited from this investment. This will helps to improve the MSME growth, size, and efficiency. Such a stimulus strengthens MSMEs to be listed on the main board of the stock market. The government has decided to decrease the gap between the manufacturing and service sectors. Units with less than 5 crore turnover will be called micro-units. Units with turnover from 5 crores to 50 crores will be called small firms. Units up to Rs 100 crore will be called medium enterprises.
For the concerned NBFCs, the government will give two kinds of funds one is a special liquidity scheme of Rs 30,000 crore and another is a Rs 45000 crore partial credit scheme. It will also benefit MSMEs as the credit flow will improve. It is decided to give Rs 90000 crore for the distribution companies by Finance Corporation and Rural Corporation.
Other steps that are taken by the PM Narendra Modi
- A relief package of Rs 1.70 lakh crore is announced to help the poor to fight against coronavirus under Pradhan Mantri Garib Kalyan Yojana.
- It will provide up to Rs 50 lakh insurance facility for a health worker
- A huge population of 380 crore poor people will be given 5 kg of wheat or rice and 1 kg of pulses per month for the next 3 months.
- The government will provide Rs 500 per month to 20 crore women and account holders for the next 3 months.
- Three gas cylinders will be provided free to 8 crore poor families for the next 3 months
- There will be an increase from Rs 182 to Rs 202 in MNREGA wages to provide direct benefit to 13.62 crore families
- Poor senior citizens, poor widows, and poor divyang will be provided an Ex-gratia of Rs 1000.
- An amount of Rs 2,000 will be paid under PM-KISAN to benefit 8.7 crore farmer families
- Wagers in businesses with fewer than 100 employees and earning less than Rs 15,000 a month will be credited 24% of their monthly salary in their
- account for the next three months.
- There will be free lending from Rs 10 to Rs 20 lakhs for Women Self Help Groups to benefit directly to 6.85 crore families.
- The District Mineral Fund will be used to enhance the quality of medical testing and screening.
Conclusion:
The government of India is doing every practice to improve the bad condition of the Indian economy. To support their people, the government has announced the relief package of Rs 20 lakh crore which is 10% of the total GDP of India. In such circumstances, we should also help such people who need a little help to survive. Surviving is the main priority of everyone in such outbreaks.
2023 update:
While it is difficult to measure the exact impact of these measures, there is some evidence to suggest that they have been helpful to MSMEs. For example, according to a report by the Ministry of Micro, Small and Medium Enterprises, the government’s measures have helped over 4.6 million MSMEs to resume operations after the COVID-19 lockdown.
Overall, the package of measures explained in the essay appears to have been effective in providing some relief to MSMEs in India and supporting the Indian economy during the COVID-19 pandemic. However, it is important to note that MSMEs still face many challenges, and there is a need for further support and reforms to ensure their long-term sustainability and growth.