Credit and Finance for MSMEs: MSME-dominated retail sector has made a fervent appeal to Finance Minister Nirmala Sitharaman to stop the sector from slipping into a position of “irretrievable financial damage”. Retailers have been amongst the worst hit throughout last year’s Covid-induced lockdown and have been but to see the pre-Covid level recovery. Now, the second wave of the pandemic is probably to drag their development down to last year’s level as various states have mandated the lockdown of malls and buying complexes exactly where most of the contemporary retailers operate.
In a submission to Sitharaman, RAI on Wednesday suggested extending the Emergency Credit Line Guarantee Scheme (ECLGS) 3. to retailers. The government had not too long ago expanded the scheme’s scope to cover hospitality, travel, and tourism and extended the scheme till June 30, 2021. Importantly, the specialist Committee made beneath the chairmanship of K.V. Kamath had last year suggested economic ratios for 26 stressed sectors for loan restructuring such as corporate retail outlets. RAI advise that this be “clarified immediately and that ECLGS funds be made available to the retail sector.”
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“We hope that even if the government enforces partial lockdown, it won’t impact the consumer sentiment and the recovery” Kumar Rajagopalan, CEO, RAI had told TheSpuzz Online. Monthly recovery of the retail sector had neared pre-Covid level for the month of February as retail sales had touched 93 per cent throughout the month in comparison to February 2020. However, amid the present scenario, almost 80 per cent retail retailers are closed when couple of retailers that stay open do not get footfall, Rajagopalan mentioned in a statement on Wednesday. “With zero revenues retailers are still expected to pay overheads such as salaries, electricity, and rentals. If a timely relief package is not provided by the government to ease the financial stress, then the industry will find it hard to survive this second wave.”
The association also requested a moratorium on principal and interest for six months for retail and other stressed sectors. The retail sector represents an “investment of Rs 2,50,000 crore and almost Rs 75,000 crore could turn NPA if urgent measures to ease the working capital challenges are not taken by the Reserve Bank of India and the Government of India. This will put at risk almost 3 million jobs directly in the retail sector.” It additional urged the finance minister to mandate banks to give ad-hoc working capital loans of 30 per cent more than present limits so that crucial payments like salaries and wages can be made and also decrease the interest prices on all loans to retailers to 6 per cent by way of mechanisms such as interest subvention schemes.