Analysis of Lockdown 4.0 speech with special emphasis on MSME’s
During Covid – 19 pandemic, the government of India has come up with Atmanirbhar Bharat Abhiyan under which it is announced Rs. 20 lakh crore economic relief package to achieve self reliance in India and to support economy which suffered due to pandemic. Its main focus on atmanirbhar or being self reliant. In ancient times India was a self reliant county. Our exports used to override imports but after colonial era India’s production in every sector started declining but during our freedom struggle our freedom fighters and people started the swadeshi movement. But during its independence India became importing country. The government has been taking many steps or initiatives since then to make india self reliant such as in its 5 year plans .
But during the time of covid 19 the present government has realised the importance of being self reliant in every sector and government is focussing largely on it. The essential commodites such as PPE, testing kits, masks etc are being imported by India from other countries even when the saras civ 2 is highly contagious in nature. Here atmanirbhar or self reliance does not mean isolationism rather it would enhance the concept of globalisation. Here it means rely on one’s own abilities and efforts. The self reliance will inject a self confidence among people by reducing the dependence on other countries. Self reliant is a growth process of a nation. It will lead to a prosperous world.
There are 5 pillars of self reliance i.e, Economy:- economy should take quantam jumps and not incremental changes; Infrastructure:- government has focussed on infrastructure that represents modern india. That will create job opportunities and will help in overcoming unemployment problem; System:- government will focus on technology system ;Vibrant demography:- india is one of the largest demography dividends that makes our country faster growing economy; Demand:- government focuses on full utilisation of demand and supply of domestic goods.
the 20 lakh crore package also includes the RBI and Finance Ministry’s already announced measures. It will be equal to 10% of India’s GDP. To boost the concept of self reliant India, PM announced a new set of reforms which focuses on land, labour, liquidity and legal frameworks.
The government has also decided to expand the definition of MSMEs, which will enable a larger number of enterprises to be classified as MSMEs and, therefore be able to avail of the benefits.
Micro enterprises will be those with investment of upto Rs. 1 crore and turnover of upto Rs. 5 crore. For small enterprises, the classification covers upto Rs. 10 crore in investment and 50 crore in turnover. For Medium enterprises, the investment limit has been doubled for manufacturing unit from Rs. 10 crore to rs. 20 crore and quadrupled for services from Rs. 5 crore to Rs. 20 crore, in addition to the turnover criteria of upto 100 crore for both sectors.
Banks and NBFCs can provide emergency credit lines to MSMEs upto 20 percent of their outstanding credit. These loan will have a 4 year tenor, a 12 month payment holiday on principal payments, and a cap on interest costs. Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover are eligible, which could help nearly 45 lakh units to resume business activity. Further, borrowers will not be required to provide any fresh collateral and guarantee fee against these loans.
Stressed small companies whose loans have been classified as Non Performing Assest (NPA) will be given subordinate debt by banks against a partial credit guarantee provided by the government. The centre will provide Rs. 4000 crore as funding support to CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)- which will help in facilitating Rs. 20,000 crore of subordinate debt to nearly 2 lakh enterprises.
While a partial credit guarantee reduces the credit risk for the lenders, the effectiveness of this measure will depend upon the appraisal.
Author: ADITYA GUPTA,
Manipal University Jaipur 2nd year