Context:
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Covid-19 impact on small businesses.
Fact:
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There are over 60 million MSMEs, 12 million kiranas and about 13 million HoReCa (hotel, restaurant and catering) businesses.
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All these account for nearly one-third of India’s Gross Domestic Product (GDP).
Worsening Condition of MSMEs:
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Loss of business:
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As per Confederation of All India Traders’ estimates, retail trade lost business worth Rs.9 lakh crore during the first 60 days of lockdown
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Non-essential sector operating at 25% pre-Covid levels.
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Huge credit gap: According to the 2019 International Finance Corporation-Intellecap report, the credit gap for MSME sector is estimated to be Rs.16.66 lakh crore.
Steps taken by the Government:
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Emergency Credit Line Guarantee Scheme : Rs.3 lakh crore collateral-free automatic loan for the stressed businesses.
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Task Forces constituted: Five task forces have been set up to make small businesses future-ready, which is expected to focus on critical areas such as technology, quality and exports.
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GST exemption: for businesses with an annual turnover of up to Rs.40 lakhs.
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PM SVANidi Yojana: Launched to provide credit to small entrepreneurs such as street vendors and hawkers.
Way Forward:
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Introduce a policy framework: From a long-term perspective, the Government needs to remove regulatory bottlenecks and implement bold structural reforms to soften the economic blow rendered to MSMEs.
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Technology and digital-enabled services: will help in creating a more level-playing field for MSMEs.
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Reduce the number of tax slabs in the present GST system.
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Provide easy access to MUDRA loans: by easing up the application and sanction processes.
Conclusion: With the current emphasis on locally manufactured products, the value of MSMEs has come more to the forefront for Atmanirbhar Bharat’s sustainability.