Respected Nirmala ji,
It is now over a year that Hon’ble Prime Minister announced the Aatmanirbhar relief package of Rs.20 lakh crore for all the sectors adversely impacted by Covid. As the Minister for Industries in Telangana, I have focused hard on ensuring that the MSMEs of our state who constitute the backbone of our manufacturing sector benefit from the package. However, one year down the line, I regret to mention that the impact of the package has been minimal for this sector that has really faced the brunt of the pandemic. More than 80% of the MSMEs in our state have faced a negative impact mainly due to the heavy lockdown of last year, and above 25% have lost significant revenues.
The most touted and directly targeted scheme for the MSME sector in the package is the Guaranteed Emergency Credit Line scheme under which Rs. 3 lakh crore were allotted. In Telangana at least, the MSME units themselves did not find anything specifically attractive in the scheme. It took us a prolonged outreach campaign to make them avail of the benefit. In hindsight, it appears that the scheme has been designed with the sole principle of making its administration simple. Every MSME has unique challenges, and a “one size fits all” kind of scheme hardly is the answer to their requirements. What will really work is a solid financial grant that takes care of all the losses the MSMEs have suffered due to the pandemic. As you would agree, actual ground challenges that the manufacturing MSMEs continue to face even today include supply chain disruptions, severe shortage of labour, and in some cases, a complete disruption in their customers preferences.
There are two other schemes also targeted at the MSMEs in the Aatmanirbhar relief package. One of them is meant for stressed MSMEs and the other one is for innovative MSMEs. Unfortunately, these two have been complete non-starters not just in Telangana, but as data reveals, in the entire country. The Subordinate Debt scheme for stressed MSMEs offers a very meager loan amount and has an impractical requirement of establishing commercial viability of the unit before sanctioning the loan, which seems very impractical during a time of uncertainty where no one can ever be sure of viability based on risk assessment. The guidelines of the Corpus Fund scheme meant for innovative MSMEs have not been released so far!
Another component of the Aatmanirbhar relief package which could have potentially impacted the MSMEs positively is the PLI scheme offered in different champion sectors. In its present form, is evident that the scheme will only benefit large manufacturing companies. A simple tweak in the scheme guidelines that can benefit the MSMEs enormously, could be to mandate the large manufacturing companies to set up a supply chain of domestic MSMEs, and share the PLI benefits with each of them proportionately.
When the Aatmanirbhar relief package was announced in May last year, we had all hoped that the pandemic will be short-lived, and therefore the package, however imperfect it maybe, will suffice. But now we know that the pandemic continues through the second wave and can possibly see a third wave also any time soon. It is high time that we do a sincere reappraisal of the Aatmanirbhar relief package and make it work more realistically and humanly for the most affected constituents, of which MSMEs occupy a top priority.
I can assure you that if the Government of India takes the right steps in this direction, states will certainly follow suit and match GOI‘s efforts with their own.
I request you to take our concerns on board and strive to meet our expectations.
With warm regards,
(K. TARAKA RAMA RAO)
Smt. Nirmala Sitharaman ji,
Hon’ble Union Minister of Finance and Corporate Affairs,
Govt. of India,
New Delhi – 110 107.