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ASSOCHAM seeks interest subvention for MSMEs
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SME Times News Bureau | 02 Jun, 2021
Recommending a slew of relief measures, including
regulatory easing, an ASSOCHAM paper has said that the government should
consider wage support mechanism and interest subvention for the MSMEs,
which are reeling under the severe impact of the Covid-19 pandemic that
has shown its heightened fury in the second wave.
Even as the
states are in the process of easing lockdowns, the trade and industry
would need an all-round support to pick up their business thread again,
after halt or near-halt of their operations since middle of April,
stated the recommendations report that ASSOCHAM submitted to the
government.
Batting for protection of employment, it said, "The
surplus funds of ESIC (Employees State Insurance Corporation) should be
used for providing wage support measures/stimulus package for the
employees."
ASSOCHAM Secretary General Deepak Sood said, "Wage
and job protection measures have been further extended by several
countries, including the US. After all, consumption, especially the
non-discretionary, has to be ensured by protecting earnings of people
even in the lockdowns. Government intervention is critical.
"This
is the time to support and spend without giving too much focus on the
fiscal parameters. I am sure, the RBI and the government are constantly
working on innovative solutions to keep infusing cash into the system
despite an understandable revenue pressure."
Sood referred to the
latest industry interactions with Commerce and Industry Minister Piyush
Goyal who said the government is reaching out to all the major
stakeholders to face the extraordinary situation arising out of
once-in-hundred-years pandemic.
The ASSOCHAM Secretary General
also lauded the RBI announcement to include hospital infrastructure like
oxygen plants in the Emergency Credit Line Guarantee Scheme, which
should see at least doubling of its present ceiling of Rs 3 lakh crore.
The
study also sought an interest subvention for the trade and industry so
that they can revive themselves with minimum disruptions. It said the
government and the RBI should "consider an interest subvention scheme
with a validity till March 31, 2022, especially, for the micro and small
business segment. Similarly, NPA norms should be relaxed for MSMEs, if
not for all industries".
As cash flow cycles have been affected
and businesses have not been able to realise receivables on time, it
will be helpful if one-time relaxation in recognizing NPAs is provided,
extending the past due norm from 90 days to 180 days, the ASSOCHAM paper
said.
The paper also expected the RBI to continue with its
accommodative stance for the policy rates in the ensuing meeting of the
Monetary Policy Committee in the wake of an unexpected rage of the
second wave of the pandemic.
The document further made out a case
for changes in the Insolvency and Bankruptcy Code (IBC) to allow the
existing corporate promoters to participate in the bids for revival of
the debt-ridden companies referred to the insolvency procedures.
"While
the industry requests for the extension of the NCLT moratorium until
March 31, 2022, the government should also consider to take away the
Section 29A where the sponsor cannot take its assets," it said.
The
government should work on creating transport bubbles so that businesses
can function, by safely managing the transportation of employees and
other resources, it added.
For providing relief to the worst hit
hospitality sector, the document has suggested for allowing GST input
credit for the restaurants.
Alternatively, the government should
give an option of dual tax structures -- 5 per cent with no GST input
credit or 12 per cent with GST input credit.
For giving a
much-needed boost to the realty sector, it has recommended reduction in
stamp duty as also property tax by half at least for three years.
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