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Economic stimulus package - MSMEs, exporters need more
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Bikky Khosla | 09 Dec, 2008
After a long wait, the government finally came out with the stimulus package which aroused more disappointment than appreciation.
This 10-point package which is a part of a coordinated effort involving the apex bank (RBI) targets infrastructure, exports, housing, auto and MSMEs through at least Rs 30,000 crore worth of additional funding, duty cuts and guarantees. The benefits of the package will be seen after a couple of months from now.
But the question is: Is this enough? I would say it's a good beginning but the government has to come up with other steps in the days to come.
As I see it from the exporters' perspective, the package does include cheaper loans to labour-intensive sectors, faster reimbursements of taxes paid on exports as well as additional guarantee for export-related insurance. But the demand of increase in duty drawback and Duty Entitlement Passbook Scheme (DEPB) rates found no mention in the package.
Moreover, exemption of exporters from the payment of all Service Tax and Fringe Benefit Tax instead of giving refund of tax paid on few services was what I was looking out for but did not happen.
Some of the announcements even looked like mere eyewash. For instance, the allocation of Rs 1,400 crore for textile upgradation fund (TUFS) which has been pending for many years is for payment of arrears. In any case, the government was obliged to give it...this is in no way an incentive. In actuality this is what the government owes the textile industry.
Although the package had certain positives for the Micro, Small and Medium Enterprises (MSMEs), I have real doubts whether the RBI announcement of a refinance facility of Rs 7,000 crore for agencies like SIDBI will really help considering its minuscule role in the credit delivery to this sector.
Earmarking priority sector lending for MSMEs, enhanced working capital support from the banks, enhancement of cash credit limits and overdraft facilities, higher working capital ratios with reduced margins should have found mention in the package too.
Despite several good pointers, I still feel the package is not enough to do away with banks' reluctance to lend to MSMEs. Availability of credit from banks is a big issue for the small enterprises. The package however is not enough to instill enough confidence in MSMEs that banks will now be forthcoming in lending - that's what I feel.
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package for SME
suren mankani | Fri Dec 12 08:39:36 2008
The SME have sufferd the most,with limited capital they are doing their export,now their is world recession,the payments are late and the banks are crystallising our bills and charging us
high interst rates,govt has extended the post shipment rates but banks are not adhering to those guidelines..in short
govt measures are to less for this big problem
Stimulus package ???
Ashwin | Wed Dec 10 12:31:09 2008
What package, where is it ?
In one word, it is all humbug
sorry to say as always we will have to fight our own battles.
Why not give tax free facility to small exporters who have been registered for say last 5 years ??? Our biz is down by at least 60 per cent and we are a husband and wife biz with loans from bank, loans for biz to run.....how can we survive?
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