Prime Minister Narendra Modi , on Tuesday this week made it clear that the battle against the COVID-19 pandemic was long drawn and we had to accept that reality , at the same time we had to move ahead and “emerge as the best in the world”. Three phases of lockdown have contributed tremendously towards effectively containing the spread of the virus but not without paying a heavy cost in the shape of the majority of economic activities plunging in dormancy , if not in absolute stagnation. As a vibrant nation with an aim to emerge as an effective financial economy of high world reckoning as also a potential promising world market , we needed to give a stimulus and take such measures which were aimed at giving a big push to the economy. It is by no reckoning any economic bauble or to be treated as any sort of triviality that an amount of Rs. 20 lakh crore is decided to be inducted into the economic system of the country as a stimulus package which besides giving spike in production activities, would address the problem of liquidity crunch as well.
Towards the first tranche of the giant economic package, the Government according due importance to the role of Micro Small and Medium Enterprises (MSME) sector in the economy as also the levels of hardships to the extent of the imminent fear of collapse, suffered by it due to the lockdown, announced a package of Rs. 3 lakh crore collateral free loans . In other words, these loans of automatic nature shall no longer be supported by any collateral security of any types of guarantees or mortgages etc. Financial institutions would not be insisting upon such a condition which besides time consuming was involving sundry avoidable paper and legal formalities. That the intention of the Government to not only bring this sector from out of the economic and financial morass by dispensing with the collateral security requirements is quite evident but it also displayed its focus on the fact that hundreds of thousands of people were earning their livelihood from this sector in one or the other form and thus was a major employment generating sector. More than 45 lakh small business holders were going to be benefitted by this move.
The most interesting and important aspect of providing this collateral free advances facilities was the flexibility of terms and conditions of the term or tenure as also the moratorium which was as four years and 12 months respectively. Not only that, the problem of existing stressed units , the Government has taken a bold initiative of taking the burden of ‘subordinate debt’ comprising a whooping amount of Rs.20000 crore which was going to directly benefit more than 2 lakh of such business units. Another Rs.50000 crore as a ‘fund of funds’ for this sector was going to be created which would be the equity in such units for growth potentials. There was now absolutely no doubt in this sector of the economy getting it duly positioned on the rails of production and growth. That is why even the definition of the MSME is altered to benefit more entrepreneurs or groups of them by increasing the limit of investment from Rs. 25 lakh to Rs. 1 crore . In the same way, the units with an annual turnover of Rs. 5 crore would be called Micro units. It is hoped, therefore, that most of the demands from this sector, of course long outstanding, not only stand duly fulfilled but additional facilities are proposed to be extended to the concerned business enterprises .
The problems of liquidity and generation of enough demand warranted that enough money was in the hands of the people for which the Government was taking slew of measures . Rs.90000 crore as bailout sanctioned package to electric companies which were facing acute cash crunch was going to infuse economic strength in them to ensure smooth distribution of electricity to light the homes and run the wheels of industry. Since on account of various constraints mainly labour etc, construction companies experienced strains have now been provided with a cushion of up to additional six months to complete the Government projects, it was going to provide a leverage to them to restart the work and hence engage requisite inputs generating economic activities. Since the total economic package announced by the Prime Minister is of Rs. 20 lakh crore, it is likely that in tranches , allocations and earmarking will be made for many more sectors of the economy benefitting more people . That speaks for the Finance Minister on Thursday announcing the second tranche in favour of migrant workers, street vendors, small traders, self employed persons, small and marginal farmers etc. With all such measures, not only would the requisite economic activities get generated but the effects on livelihood, earnings, spending etc on account of the lockdown due to COVID 19 crisis shall be vastly eased. More tranches of the announcements would hopefully cover additional segments to ultimately usher in a bright future of growth and more importantly much longed for self reliance.
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