New Delhi: The COVID-19 pandemic had a devastating effect on micro, small and medium enterprises (MSMEs). A study conducted by the Khadi and Village Industries Commission (KVIC) on the micro units set up under the Prime Minister’s Employment Generation Programme (PMEGP) revealed that 88% beneficiaries of the scheme were “negatively affected”.
Of these 57% reported that their units were shut down during the period, while 30% reported drop in production and revenue.
In reply to questions in the Lok Sabha, the Union minister for micro, small and medium enterprises, Nitin Gadkari, said that his ministry has assessed the impact of COVID-19 on the micro units through a study conducted by KVIC. He said the study revealed that of the 12% who benefitted from the programme during the period, 65% said their units were in retail and health sector while around 25% said they were dealing with essential commodities or services.
Unpaid salaries
On the question of regular payment of salaries, the minister stated that around 46.60% of the respondents stated that they had fully paid the salaries, 42.54% said they have partially paid, while 10.86% reported of not having paid any salary during this period.
Gadkari said a majority of the beneficiaries expressed the need for additional financial support, relaxation of waiver of interest and marketing support for their products. In this regard, he added that the government has announced a comprehensive package of Rs 20 lakh crore for all the sections of the society including industries and MSMEs, under the Atmanirbhar Bharat Abhiyan (ABA).
With respect to MSMEs in particular, the minister said the government has put in place an emergency credit line. “The government has operationalised Rs 3 lakh crore collateral free loan scheme with effect from May 23, 2020, which is likely to benefit 45 lakh MSMEs. As on January 1, 2021, loans for an amount of Rs 2.10 lakh crore have been sanctioned,” he elaborated.
Dues to be paid in 45 days
Further, the minister said that a provision of Rs 20,000 crore has been made as subordinate debt for stressed MSMEs. “As on December 31, 2020, 249 guarantees have been approved amounting to Rs 27.27 crore,” he added.
He also stated that Rs 50,000 crore equity infusion for MSMEs through Fund of Funds (FoF) has been approved. Also, he said in the reply, the government has announced that MSME dues should be cleared by the government agencies and central public sector enterprises (CPSEs) within 45 days. “Since May 2020 and up to January 11, 2021, pending payments of Rs 26,363.75 crore have been made to MSMEs out of the total dues of Rs 33,323.92 crore,” he added.