Financial Relief for Small Businesses Underway

The government of India may soon provide the much-needed financial relief package to the MSME sector of the economy. This financial stimulus had been one of the main demands from the MSMEs. It will help them overcome cash flow and liquidity problems produced due to the pandemic-induced lockdown.

Official Word Comes Out

Nitin Gadkari, the MSME Minister said on Sunday in an official webinar that the government may soon announce a financial relief package for the MSME sector. He is hopeful that the Prime Minister and the Finance Minister will soon act on this need in this industrial sector.

The MSME Minister said that there is a need for an ‘’integrated approach” if the pandemic crisis is to be tackled. Such an approach can then be used to leverage and find out new business ideas and new business opportunities. The Minister encourages overseas students to participate in the country’s building up of a response to the challenges presented by the Covid-19. This is possible by a combination of research, management, innovation, higher education, medicine, and more.

Right now, around 74% of small businesses, MSMEs and startups are on the verge of shutting down their doors to the public, or to scale down their business at the least. They plan to do this in the coming 6 months due to the effect of the pandemic on the economy. Among these, 47% say that they have less than a month’s worth of cash left. 24% of them say that they have one to three month’s worth of cash left while 23% say that they have three month’s worth of capital left.

The Solution

The MSME Minister urges small businesses to focus on entrepreneurship, innovation, technology and science. He encourages them to build on their research and experiences to convert knowledge and skills into wealth. Nitin Gadkari also suggests a cost reduction if the companies wish to remain competitive.  The minister has said already that the MSME sector is on the verge of collapse. The money desired is only the dues pending to the sector, and is valued at around 6 lakh crore.  A legislation is needed soon.