But where is the money?
MSMEs are the life line of India Inc. As per reports there are about 6.5 crore MSMEs in India & approx 11 crore people are directly employed by them apart from the indirect employment.
It is very important for the revival of India that these MSMEs are infused with new life.
How do we do this? By creating a stimulus corpus.
Central Govt has been finding innovative ways to impose different types of Taxes and Cess such as
- Education Cess
- Swatch Bharat Cess
- Oil Industry Development Cess
- Krishi Kalyan Cess
As per Finance Commission Recommendations Centre is bound to share the Tax revenue to the States for eg 14th Finance Commission has recommended 42% revenue sharing.
But the Revenue generated through Cess is exclusively for Central Govt to spend, but they have to be spent only for that specific purpose for which it was collected from the people.
All these funds get accumulated in the consolidated fund of India, but cannot be utilised for anything other than its specific purpose.
Between 2015-2020 a whopping 3.59 lakh crores are lying unutilised.
In the FY 2019-20 alone 2.76 lakh crores were collected through different types of Cess and Surcharge.
In the FY 2020-21 the estimate was of 3.16 lakh crores, but corona ruined the game.
When questioned why isn’t govt spending that money…Govt says there’s no need to spend more than that.
If that is the case why don’t they reduce the burden on the people? Govt has no answer
The percentage of Cess collected by the government spent for the specific purpose is very marginal as if everything has been accomplished.
For eg
- Primary Edu Cess: 20% spent
- Oil Industry Development Cess: 1% / 900 crores spent
- Infra Structure Development Cess: 7% spent
- Research and Development Cess: 10%/ 800 crores spent
- Clean Energy Cess: 30% spent
- Swachh Bharat Cess: 30% spent
- Highest % of Cess spent is 72% (don’t know which head)
The unspent Cess under different head which need immediate infusion of funds have been neglected, while the collected funds are kept idle.
For eg
- Higher/Secondary Edu Cess: 94,000 crores unspent since 2006-07
- Oil Industry Development Cess: 1.80 lakh crores lying idle
- R& D Cess: 7,200 crores unspent
- GST Cess: 53,000 crores unspent
*Data as per CAG report
We have seen Modi govt withdraw 1.76 Lakh crores from the reserves of the Reserve Bank which no government in independent India has ever touched. Similarly they will try to siphon of these unused funds also.
Before that its our duty to ensure they pass GO under Epidemic Act and utilise these funds exclusively for Revival of the MSMEs
Plan for Revival of MSMEs
Theories won’t work in this Pandemic Lockdown
Only and only practical approach will save us to fight back
1. Save the Industries First, most of them are sure to be flagged NPAs due to non payment of the Interest on CC limits or working capital or evenTerm loans.
2. Give them necessary liquidity or stimulus to breathe first by paying their immediate bills like rents, power (in SSIs its Slab not meter reading) so minimum bill is generated in any case, wages etc.
3. Once the Banks reopen in their full capacity write off these month’s interest etc.
4. Renew the limits both fund based and non fund based, wherever they are due with eased norms and lower Rates, as most of them will be either NPAs or underperforming and won’t be able to meet their targeted projections.
5. Create Demand by monetising the people and increasing Govt Expenditure.
6. Provide necessary support for Raw Material procurement, Logistics, storage and warehousing, cold storage for perishables.
7. Encourage industries that produce tools, spares, raw material, ancillaries and interconnect them through a virtual network.
8. As we don’t foresee much on the Exports, help them diversify and produce domestically consumable products.
9. There are lot of exemptions given to EoUs in Duty and Taxes, why not extend those facilities for our non EoUs and help reducing the cost of the end product.
10. Finally INR must be strengthened or banks should help them freeze the exchange rate for the importers.
I know that the Govt tricked us on the Employment figures by showing us the increase in PF contributions…but actually Govt was paying for the Employer and the Employee, why not do the same thing now to uplift the MSMEs?
As people are forced to Pay cuts and delayed payments, why not give tax holiday for all?
Just fix GST at 5% on all essential goods that attract over and above 5% GST and make those with 5% GST as Tax free.
Encourage Exports but not Imports.
Remember Indian Jugad can be our biggest asset now, interlink our interdependent industries or services to create business for all.
Help genuine Entrepreneurs to stay alive as they are the wealth creators of India apart from generating direct and indirect employment.
To save our MSMEs from biting the dust or taken over for peanuts…lending banks should become Stake holders, with an exit plan once the industry stabilises.
