COVID-19 and small businesses: An industry crippled by the first wave is in crying need of help in the second
When the second wave of COVID-19 is threatening to wipe out large masses or render ineffective huge tracts of India's economic landscape, there is not a sign or semblance of a financial assistance package
Where is the finance minister?
Last year, at around the same time, when COVID-19 was in its nascent stage and the nation under lockdown, the Central Government pompously announced a slew of economic measures of which only a few were of any worth to the people. Thousands of crores were supposedly at the disposal of suffering masses, bundled in slick packages. Book entries were passed off as real benefits.
This time around, when the virus is threatening to wipe out large masses or render ineffective huge tracts of our economic landscape, there is not a sign or semblance of a financial assistance package, required in great urgency, and in the hands of the people and industry, particularly the MSMEs.
A specious argument could be that the Centre’s hands were tied owing to the Election Commission guidelines vis-à-vis elections in four states Assam, West Bengal, Kerala and Tamil Nadu and the Union Territory of Puducherry. But then the rulers, from leader to cadre, had violated EC norms even more flagrantly during these elections that the aforesaid logic has no steam.
Also, a package could have been readied in the last few days and announced on the night or the next day of the final phase.
Alas, the delay betrays insensitivity on the part of the Central Government to people’s woes, a characteristic that has been on display from the days of demonetisation to the deadly disease dogging us every day.
Last year itself, the small and micro firms, self-employed, owner-driven or mini family businesses were the worst hit. Their importance has always been underestimated and ignored. Their number forms the invisible backbone of India’s economy and its much-flaunted numbers. They are the biggest employers, going about their businesses with meagre means and under perennial bureaucratic harassment. Their order books crashed, cash registers silenced, trained labour gone and their own survival came dark clouds. Most of them have not recovered and now comes the second wave of COVID-19 cases, burying hope deeper. This is a human tragedy too as livelihood sustains life. Starvation, shame and suicide are cousins of COVID-19 .
During the first wave of COVID-19 cases in 2020, the Central Government announced a grandiose package for MSMEs in May. Much of it was bunkum and the associations promptly protested. But the proposals had some silver linings: a six-month moratorium on interest and EMIs for borrowers from institutions under the control of RBI; also, a loan/limit of up to 20 percent of the existing facility was allowed as additional borrowing. Those who took loans from private lenders truly had it. Their EMIs landed with the precision of a trained boxer’s punch. Very few could fend; most could not defend.
But then, most loan applications were made by May-end or early June, given the hunger of the borrowers. And barring a lucky few, the sanctions arrived in mid-July to almost August end. The finance minister proudly proclaimed that she was receiving daily reports of the loan disbursement status, which itself was an impossibility given the banking system’s reporting protocols. But then such slick statements also covered up many lies on the sly. Most banks used the additional ‘largesse’ to reduce the original facility itself, quoting ‘poor or reduced’ performance. And to add salt to injury, they adjusted the entire six-month moratorium interest, along with interest on interest, leaving borrowers worse off with additional debt. And those instalment payments begin this August.
Thousands and thousands of small and medium shops closed due to the pandemic. The mid-size businesses downed their shutters and those who with an image of a bustling entity are struggling to live up to that. There are also the halfway houses whose insolvent status none will believe and noisy lathes and mini-factories lavishing in graveyard silence. Then there are vegetable vendors and flower sellers and doll dealers outside parks, temples, etc, confined to shacks and shanties, that is if they have any.
As the second wave of COVID-19 cases spirals out of control, one can afford none of the usual financial rope tricks. Real schemes are the need of the hour. A six-month moratorium on bank interest and EMI without interest on interest is the first step.
Lockdown has become a politically incorrect term, but it prevails and pervades in all its real intent and content, barring the booming bourses and the come-what-may IPL.
We want to see the finance minister. We want to know what she has on offer. It’s already late, very late.
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