Panaji: Manguirish Pai Raikar, Chairman, National Council for MSME of ASSOCHAM said that
MSME’s will be required to rework their financial requirements and would need restructuring and hence, financial institutions will have to play a big role here.
Raikar said “there has to be a strategic planning and proper management for MSMEs when the lockdown is lifted.”
We are passing through a very critical phase of our life fighting an invisible and invincible enemy which has given us this pandemic.
Now the question arises how small businesses will come out of this. Most of them have their money locked with their existing business deals, which looks to be a distant dream currently as everyone is strapped of cash. While businesses are closed but they have to pay interest to the banks, pay for salaries, ESIC contribution, routine government revenues like GST, TDS, etc, electricity and water bills, telecom services besides a host of payments to be made to others including suppliers. Although the EMI payments have been deferred, the liability remains and the interest continues. The future looks gloomy. The businesses are seeking answers from creditors as to when they would get the money, whether goods manufactured as per the order would be lifted etc. It is an endless story of hardship faced by small businesses currently.
There has to be a strategic planning and proper management when the lockdown is lifted. It will not be an easy task for entrepreneurs because things to fall in place will take their own time. Items of daily need would be immediately required but the main factor would remain capital. Any shortage at this stage will kill the business. It is anticipated that nearly one-third of small businesses in India would be unviable and would have to be closed. Unemployment would definitely be the outcome of this.
One suggestion made to the government earlier was to launch a ‘Stabilisation Fund’ through which money should be made available to the entrepreneurs over and above their regular borrowings without collaterals or guarantees. Businesses will be required to rework their financial requirements and would need restructuring. Hence, financial institutions will have to play a big role here and will have to work with an open mind. Moreover, the government will have to release the due payments of small businesses immediately while ensuring the same from large industries, PSUs. This would make small businesses to get back to their daily routine far easy. Small businesses’ needs are limited, their manpower is also within their ambit and they are far more resilient than large businesses. On the other hand, the government would have to cut red-tapism and control corruption at the lower level.