Government of India’s Support For SMEs and MSMEs During COVID-19 Crisis

Due to pandemic COVID-19 and lockdown, the CEOs and other chief officers of SMEs, MSMEs, and startups in India facing many challenges and difficulties, not to function their business but to survive this COVID-19 crisis. Their cash-flow, operations, employee management, vendor management, delivery, logistics, etc all have been affected severely. The government’s financial support will act primary seed money for SMEs hit by zero cash flow due to the lockdown.

On the Government’s support package for SMEs and MSMEs, Satish Kumar V, CEO at EverestIMS Technologies, said, “The country has been facing inclement times due to the COVID 19 lockdown and subsequent economic fallout – especially the MSME sector. The Government has recognized these issues and risen to the occasion by announcing this broad-based stimulus package. The various measures will add up to a significant boost for the sector which is much needed as they often form the bulwark of the local economy by providing employment and contributing to the GDP as a whole. Things like the collateral-free automatic loans will definitely help the cash flow and payment situation. What this does is it boosts transactions and business which will ultimately lead to the wheels of the economy chugging back to life and (we hope) to full speed in the long run. Regarding software companies such as ours, we are awaiting further specific details after which we will be able to gain insight into how it affects us and the IT industry as a whole”

Companies are operating their businesses remotely but could not maintain the flow. The government of India has come to support with various plans and schemes for the SMEs and MSMEs to ease their recovery journey from this ongoing COVID-19 crisis. We have highlighted below some of the important points that will show how Govt is supporting SMEs and MESEs to sustain in the market.

1. Encouraging Citizens To Support Local Producers And Service Providers

Prime Minister asked all the citizens of the country to be “Vocal for the Local.” This means to support and promote local brands. He said in his speech that all the big international brands were once small brands, and they became big only because of citizens of the country who started supporting them. This also goes hand-in-hand with ‘Make in India.’ This will increase the consumption of Indian brands in the country and the world, and this will boost the economy to a great extent. The government of India’s ‘vocal for local’ initiatives will support local businesses, including Enterprises, SMEs, MSMEs, and Startups, to regain their base and boost the economy.

2. Credit And Finance Aids

In the stimulus announced by the government of India, they have provided financial and credit support to SMEs and MSMEs. These will help them restart their work and get into the flow of work again. Many companies were on the verge of closing down and bankruptcy. These companies will now get a chance to stand again. The biggest problem was of resources, raw materials, and payment of salaries to the employees. Without pay, no employee will agree to work, and hence this stimulus and the credit will help them a lot. The loan will also be provided for a longer tenure and at fewer interest rates.

3. Collateral Free Loans Worth Rs. 3 Lakh Crores

The finance minister announced collateral-free loans worth Rs. 3 lakh crores and that might really be of great help for SMEs. Many SMEs, MSEs, and startups really need money to restart their businesses and start their work in the market. They will also take the loans and the best thing is they do not have to put anything as collateral, which means that the process will be fast.

4. Releasing All The Past Payments

Government and central private companies have said that they will release all the due payments of the SMEs, MSMEs, and startups in the coming 45 days. The government’s initiative to release dues will be a great support for business as the due payment is large and will help SMEs get back on their foot. If this happens soon it can provide many SMEs and MSMEs a great financial relief.

5. Moratorium On Loans By RBI

Reserve Bank of India (RBI) already announced 3 months moratorium on all the loans that anyone in the country had. This means that no one has to pay their loans from the start of the lockdown period until June. They will have to pay all the loans together when the moratorium ends. This was to make sure that people don’t have to face financial problems in lockdown. There are chances that this moratorium can get extended for 3 more months.

Mr. Prashanth G J CEO at TechnoBind said, “Well, the first installment of the stimulus package is out – looks good at the outset. But we would have liked it have had more depth in terms of steps to boost consumption. While efforts to ease liquidity is always welcome, it is eventually demanding that will kick start the economy and hence drive growth. Well, the next phases are still there, we will look forward to some demand boosting initiatives!”

• CXOs Should Have A Clear Vision For The Post Pandemic Future

• Security While Working Remotely [Interview]

• How to overcome from COVID-19 uncertainty