Lockdown Extension May Shut 25% MSMEs Permanently, Liquidity Crunch Will Choke India's 6.9 Crore Small Traders: Experts
Experts from MSME sectors warned that Centre's decision would shut 25% MSMEs permanently. The market leaders even claim that the 19-day lockdown extension may choke India's 6.9 crore MSMEs, with exporters taking the biggest hit.
New Delhi, April 15: A day after Prime Minister Narendra Modi extended the lockdown period till May 3, experts from micro, small and medium enterprise (MSME) sectors warned that Centre's decision would shut 25 percent MSMEs permanently. The market leaders even claim that the 19-day lockdown extension may choke India's 6.9 crore MSMEs, with exporters taking the biggest hit.
Expressing his opinion on the impact of lockdown on MSMEs, PHD Chamber of Commerce and Industry , President D K Aggarwal said,as quoted by New Indian Express, "We believe 25% MSMEs will close permanently." While, Federation of Indian Export Organisations (FIEO) president Sharad Kumar Saraf said that MSME exporters have hardly any liquidity left to pay wages for April. He said, "The start of selective manufacturing will be a long-drawn battle due to the unavailability of labour, raw material and transport." What is Stimulus Package? Know What India Inc Wants From Narendra Modi Government in Hope to Revive Floundering Economy Amid Coronavirus Lockdown.
He added that MSME exporters will be hit in the absence of an sizeable and effective financial package. Apart from this, FIEO raised demands that Centre's comprehensive package should include interest-free credit to cover six months of wages, rental, utilities along with a six-month loan moratorium for exporters. Among other thing that FIEO said was that 15 million jobs in export units are likely to be affected as more than 50 percent of export orders have been cancelled. worldwide.
Also, Confederation of Indian Industry (CII) expressed similar opinion. CII Director-General Chandrajit Banerjee said, "MSMEs do not have the capacity to withstand massive shocks like Covid-19. The health of these MSMEs will have a bearing on the entire supply chain, including large corporates. Therefore, immediate and substantive support measures are needed to see the MSMEs through this crisis." IMF Cuts India's Growth Rate to 1.9% in 2020, Predicts Worst Global Recession Due to COVID-19.
Various industry bodies have been asking a sizeable stimulus package to the tune of Rs 9-10 lakh crore from the Union government to tackle with the upcoming financial crisis due to COVID-19 lockdown. Meanwhile, the International Monetary Fund (IMF) on Tuesday slashed India's projected GDP growth to 1.9 per cent in 2020 from 5.8 per cent in January, as the global economy hits the worst recession since the Great Depression in the 1930s due to the raging coronavirus pandemic that has nearly stalled all economic activities across the world.
(The above story first appeared on LatestLY on Apr 15, 2020 10:41 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).