Covid-hit MSMEs and startups, which have been reeling once more below the second wave following a really gradual recovery from last year’s pandemic influence, are most likely to scale down, shut down, or sell themselves this year. According to a LocalCircles survey involving more than 11,000 responses from more than 6,000 Startups and MSMEs positioned in 171 districts of India, 59 per cent startups and MSMEs are anticipated to scale down or sell or shut down their operations in the next six months. 41 per cent are out of funds or have much less than a month of funds left to survive when only 22 per cent have more than 3 months of runway. Also, 49 per cent are arranging to cut down their employee compensation and advantage expenses by July to sustain corporations.
“With Dept of Science & Technology coming out last week advising that the Covid aerosols can travel up to 10 meters or 30 feet and that surface transmission is also happening, the ‘unlocking’ of 2021 will have to be quite different and more stringent than 2020. It is critical that the government comes out and extends all possible support to MSMEs and startups during this time which includes tax payment deadline extensions, contract delivery date extensions, price adjustments on government contracts and make engaging on government work easier for startups”, Sachin Taparia, Chairman and Founder, LocalCircles told TheSpuzz Online.
Moreover, 88 per cent smaller corporations wanted assistance in government directing public sector units (PSUs) to provide cost escalation to MSMEs due to huge boost in commodity costs such as steel, copper, and so forth. Further 92 per cent sought a 3-six months’ time extension to provide on government and PSU contracts with no any liquidated damages.
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While the government had earlier this month supplied a late charge waiver for filing GSTR-3B month-to-month returns for March and April and decreased interest prices for late payments, 89 per cent respondents, based on a survey by the platform of more than 2,400 corporations, wanted no penalty and interest relaxations on GST late payment and return filing till June 30, 2021.
In order to boost credit flow to MSMEs, the Reserve Bank of India in February this year had permitted scheduled industrial banks to deduct credit disbursed to new MSME borrowers from their net demand and time liabilities (NDTL) for calculation of the money reserve ratio (CRR). Earlier this month, Governor ShaktiKanta Das had extended this exemption, which is at the moment readily available for exposures up to Rs 25 lakh and for credit disbursed up to the fortnight ending October 1, 2021, till December 31, 2021. Among other relief measures, Das had also permitted borrowers with loans up to Rs 25 crore and who had not availed restructuring below any of the earlier restructuring frameworks like below the Resolution Framework 1. as of August 6, 2020, and who had been classified as ‘Standard’ as on March 31, 2021, to be eligible “to be considered under Resolution Framework 2.0.”