In order to enable Covid-hit MSMEs recover, the government ought to think about wage assistance mechanism and interest subvention, an Assocham paper stated on Wednesday. Suggesting measures to the government for protection of employment amongst MSMEs, the business body stated that the surplus funds of Employees State Insurance Corporation (ESIC) ought to be utilised for giving wage assistance measures/stimulus package for the staff. The request came days immediately after the government had announced the extension of the Emergency Credit Guarantee Scheme (ECLGS) from March till September 2021 to sanction guarantees worth Rs 3 lakh crore.
“This is 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,” stated Deepak Sood, Secretary General, Assocham in a statement. He added that the government’s Ease of Doing Business and Competitive Manufacturing focus requirements to go in overdrive with reforms to the Electricity Act, Unified Tariff and Unbundling of Natural Gas, removal of old and redundant laws for a amazing financial rebound post-pandemic.
Assocham also sought interest subvention for the trade and business with validity till March 31, 2022, particularly, for micro and modest enterprises. Likewise, NPA norms ought to be relaxed for MSMEs, if not for all industries. “As cash flow cycles have been affected and businesses have not been able to realize 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,” it added.
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The RBI had last month announced Resolution Framework 2. to let people, modest enterprises, and MSMEs — with loans up to Rs 25 crore and who have not availed restructuring beneath Resolution Framework 1. and other folks and had been classified as ‘Standard’ as on March 31, 2021 — avail one-time restructuring beneath the proposed framework till September 30, 2021. For these who had currently availed restructuring beneath last year’s Resolution Framework 1., Governor Shaktikanta Das had permitted banks to modify their plans to improve the period of the moratorium and/or extend the residual tenor up to a total of two years.
Particularly for the hospitality sector, Assocham recommended permitting GST input credit for restaurants. “The restaurant industry is the only sector that is not allowed to claim tax credits under the current GST regime. This undermines the stated objective of bringing more businesses into the organized fold and heavily increases the capital expenditure.”
According to the hospitality body Federation of Hotel & Restaurant Associations of India (FHRAI), the hotel sector’s total income declined about 75 per cent in the last economic year. The income hit was close to Rs 1.30 lakh crore in FY21 vis-à-vis Rs 1.82 lakh crore in FY20. The sector’s income at the starting of 2021 was beneath 20 per cent of pre-pandemic levels and considering the fact that April 2021 the income hasn’t crossed 5 per cent, the body had stated in a statement on Wednesday.