In an interview, Commerce Minister Nirmala Sitharaman said that even though micro, small and medium enterprises (MSMEs) are facing problems due to demonetisation, they will be the ones getting a better access to capital later as the banks are flushed with money now with high number of deposits in last few days. Edited excerpts:

Q: Various exporters have raised issues related to demonetisation. Many of them, especially those from MSMEs, have asked you to raise the withdrawal limit to Rs 5,00,000 to pay their workers. What is happening on this front?

A: First, all exporters were appreciative of demonetisation. They said it will bring a cleaner economy and institutionalise ways to approach transactions. Now, among them, those who belonged to the sectors where unskilled and migrant labourers were working, like carpet making, weaving, metal works, handicrafts, etc — only these sectors wanted greater withdrawal limits because they were still paying their workers in cash.

The commerce secretary clearly underlined the fact that post Jan Dhan, it is expected that employers credit salaries in the bank accounts of the workers, rather than paying in cash. With all this said, they requested us saying that till such time eases out, would you please enhance our withdrawal limit, some asked us to increase it to Rs 3 lakh, while some asked for up to Rs 5 lakh. We have certainly passed the message to the finance minister, informally from my end. The report which has to go from ministry to ministry will certainly go.

However, as 2-3 days have already passed after the meeting, we see that the currency position is easing out, more ATMs are now working after recalibration, and the government has announced that they are sending money to cooperatives and rural areas keeping in mind the farmers’ needs. Therefore, I think that the temporary hitch that they (SMEs) had will also get addressed in all these reactive steps of the government.

Q: You have said that the access of capital to MSMEs should be better than what is at present. The bigger players have easy access to capital. Have you worked out a proposal to discuss with finance ministry?

A:  I have spoken to the finance minister about it. MSME ministry has also constantly been saying about it. But for SMEs, who contribute about 40 per cent of engineering exports, I was interested that the banks should have a fresh approach rather than treating them as a cameo of larger companies. When you think that the problems being faced by the larger ones and smaller ones are same, the picture gets distorted. SMEs have unique problems and unique demand for cash, among other things. The way in which they pay their recurring costs may also be different than the way the larger ones are paying it. Therefore, the very nature of credit and turnover for SMEs have typical characteristics.

After demonetisation, the banks have got an unexpected influx of money. I think, as was suggested by the finance minister, and of course this is something which RBI and others will have to think about, there will now be enough reason for banks to extend that kind of credit support for SMEs.

Q: On November 23, regarding Lokpal, the Supreme Court said that government should move ahead and establish it. SC said it cannot allow the Lokpal issue to become a ‘dead letter’. Is government moving forward on this front?

A: We are taking a lot of steps towards black money removal. Even in that, through the SIT (special investigation team), the Supreme Court has been kept informed. The SIT’s suggestions are also followed by the government in pursuance to the goal to eradicate black money. So, I am sure that the SIT, which comes under the Supreme Court, will give necessary advice in relation to corruption eradication too, which is where the Lokpal comes in.

Q: But is the government working on establishing the Lokpal?

A: That is something which the home ministry will be able to talk about.

Q: The discussions have been going on with New Zealand, Canada and Australia regarding free trade agreements (FTAs). When can we see them coming through?

A: The FTA talks with Australia was moving very fast until a change in leadership. Now, they have resumed talks. It has to start from where we left it earlier. I went to Canada and we started talking to them. In fact, both the ministers made a public statement there and the chief negotiators have been given the task of going ahead. They are doing it. But the investment model trade agreement, which we have come up with, is also a matter that has to be taken up with a sense of urgency.

EU countries have said that bilateral investment treaties with India have started expiring. They have suggested that the current treaties should expire only when the new ones have been decided, otherwise their firms in India will face problems. Your comments.

India gave a year’s notice to all the countries. And, the chief negotiator came from EU, and met with the economic affairs secretary on this matter on November 9. He also met with commerce secretary to take forward BIT and the FTA negotiations with EU. So, we are waiting for them to come back to us.

Q: Do you feel the gold import duty should be reduced in the current scenario?

A: I have always suggested that the gems and jewellery industry in India has a great potential for export. They have been able to keep themselves afloat even in difficult times. There have been some dips in the recent past. But, the import of gold is necessary for value addition and then export. So, from the point of view of commerce, I would like to permit gold import without much difficulty.

But, earlier, there was this question of current account deficit. It was not thought as a proper step (import duty reduction). Now, with the kind of developments we are seeing, along with the suspicion that a lot of gold is being smuggled in, I think that there should be free allowing of gold imports. It will bring down smuggling too. But of course, the finance minister has to take a call on that.

Q: US president-elect Donald Trump has talked about scrapping the TPP. How do you see this development?

A:  I will wait and watch what he does after he becomes the President on January 20.

Source: The Indian Express