Chennai: Tiredness, aches and pains, breathing difficulties and threat to life if right treatment is not provided on time. These signs of a Covid-19 affected person are now being shown by the MSME (Micro, Small and Medium Enterprises) sector too, so to say.
While coronavirus has hit lives at one side, it has wreaked havoc on the livelihood on the other. Among the worst affected is the MSME segment.
Pointing out to a recent online survey conducted among factory owners and other stakeholders, All India Manufacturers Association past national president K E Raghunathan tells News Today that the government should immediately step in to provide life support to the industry, to ensure its survival and protect the jobs of millions. Excerpts from a telephonic interview.
Q: How badly the MSME segment has got affected because of lockdown?
A: We conducted a survey one month ago, that was when the lockdown had just started. It was an all-India study by the AIMO. Its findings said that if the lockdown goes for 30 days, 23 per cent of MSMEs will be closed. If it continues for 60 days, minimum of 41 per cent will wind up. It is almost certain that normalcy will not return in 60 days of lockdown phase. When I say wind up, it means they will go beyond recovery. Even if loans and equities are pumped in, it amounts to putting them on dead investment as expenditure and losses would have eaten the companies.
Q: What was the situation and state of MSME before lockdown? Even before that, manufacturing sector was in very bad shape. A brief about it and the reasons for it…
A: As far as the MSME sector is concerned, there has been one hurdle after the other for the past three years. Demonetisation was the first blow and everybody went through the problem. It took three-four months to revive. Then came the GST and its impact was felt throughout 2019.
In 2019 the slowdown of critical sectors such as real estate and automobile had taken away the day to day bread of the MSMEs who were dependant on them. Now, in 2020, things have gone from bad to worse due to the pandemic. March is very crucial for every business establishment since it is the last month of the financial year. But, lockdown had to be imposed to contain the spread of coronavirus and no company was able to meet its target.
There has been no activity throughout April, the first month of the new fiscal and now possibly till May too. Chennai continues to be in red zone and even if restrictions are eased after 3 May in other parts, it would not be of big help since the capital of the State, which is also the heart of Tamilnadu’s business activities, is closed.
Q: No business, but the government orders to pay salary to employees. Your comments on that…
A: How will it be practically possible? We would have liked if the government had just given as a advisory than as a directive. When the government itself has frozen DA hike and other benefits to its employees, how can the MSME units pay their employees without any business?
The industry has moved the court. The government is yet to announce any financial package. Those (companies) which are financially sound would give (salary), those who are not can’t. In my view, the numbers of the can’t would be much higher than the can.
Q: What type of the help from the Central and the State governments will help revival of MSME segment?
A: The Central government has to play a huge role in this. Migrant workers, who form a large chunk of labourers in Tamilnadu, have been allowed to go back to their States. So, there will be manpower crunch when the factories are reopened.
All government payments such as statutory levies like GST, PF and ESI should be stopped for six months. We want waiver of EB fixed charges and salary is to be subsidised by the government. Companies also expect refunds on GST and TDS. Dues from the government are to be cleared forthwith. Also, a bailout package is the need of the hour.
Q: What type of immediate help from banks to you expect to stay put?
A: We want EMI moratorium and waiver of interest payment on overdraft/cash credit limit. Banks should give ad-hoc additional loans of 25 per cent to the existing loan takers and extend Rs.15 lakh as a working capital loan to all start ups without interest.
Government had made some major announcements to the banking sector, but the banks should pass on those benefits to MSMEs. In reality, the banks are actually asking the MSME owners to regularise the accounts by remitting excess drawn due to poor turnover performance as compared to projections.
Q: What kind of policy decisions are necessary for revival of MSME segment?
A: AIMO has sought a string of relief measures. They include removal of the action to be taken for non payment of salary, release of all funds kept with the government and public sector units, moratorium of six months without interest burden for any loan up to Rs five crore. All types of loans should be given this relief.
Q: MSME segment is one of the biggest sectors. If it gets affected further more, what will be the result and loss and how it is going to affect the employment and economy of Tamilnadu in general?
A: MSMEs contribute to 32 per cent of the country’s GDP. The segment employs over 12 crore people. So, the moving wheel would come to a halt if the sector is affected. Lakhs of youngsters are coming out of colleges every year, where will they go for jobs if this sector is hit? The patient is in ICU and an emergency surgery is needed.