Study on demonetisation
Sharing the findings of a study on the impact of demonetisation on micro, small, medium and large enterprises across the country, the AIMO, while hailing the Prime Minister’s “bold” move, said, “We stood by you, we now need you badly,” highlighting the plight of the manufacturing industry.
The industry’s immediate demands include removal of all limitations on cash withdrawals from banks, increasing income tax limit up to Rs. 5 lakh to trigger consumer spend, putting a stop on the reported harassment by revenue enforcing authorities on business entities, refraining from thrusting sudden changes – be it policy matters or other announcements and ushering in cyber security for eWallets.
Cash crunch
“Lack of adequate finance has hit the MSME sector badly. The Prime Minister had announced on the last day of the previous calender year that all SMEs would get up to Rs. 2 crore under credit security scheme (collateral-free loan),” Raghunathan said, citing the study finding that banks were not giving loans of even Rs. 1 crore to SMEs without collaterals at present.
“Our informal enquiry with the Debt Recovery Tribunal (DRT) showed that 52 per cent of the pending cases under SARFEASI (below Rs. 1 crore) were secured against properties. Banks also admitted that they were taking security for even smaller loans. If the PM’s announcement is to be implemented, then all banks must be directed to immediately return the securities collected from the MSMEs for loans already given up to Rs. 2 crore,” the AIMO President said, emphasising the need for lowering the lending rate.
To increase funds flow, all outstanding payments from public sector undertakings and refunds from GoI must be cleared within the next fortnight, he said.
The AIMO President further sought abolishing income tax for MSMEs which made profit of up to Rs. 1 crore to enable them set off the revenue loss incurred the last three months, removal of charges on cashless transactions and making POS machines available to all traders and MSMEs for free.
He also suggested evangelising easy bank credit up to Rs. 1 crore with auto recovery of say 3 per cent of bank collections towards repayment.
Source: The Hindu Business Line