Covid-19 stimulus steps inadequate

New Delhi: The stimulus package announced by the government for the revival of the pandemic-hit economy has been found to be 'inadequate,' according to a report by Parliamentary Panel.

The report of the department-related Parliamentary Standing Committee on Industry on the impact of Covid-19 pandemic on micro, small and medium enterprises (MSME) sector has noted that in the process of economic recovery post-first wave of the pandemic, the second wave has even more vigorously ripped the economy particularly the MSME sector.

"The committee observes that the stimulus package announced by the government for the economic revival from the pandemic hit economy has been found to be inadequate as the measures adopted were more of loan offering and long-term measures instead of improving the cash flow to generate demand as immediate relief," it said.

It has recommended that the government should immediately come out with a larger economic package aimed at bolstering demand, investment, exports and employment generation to help the economy, including MSMEs to recover from the pandemic fall-out.

In their submission to the committee, various MSME associations have stated that due to a sharp fall in business, most of the MSMEs faced an acute cash crunch and needed immediate liquidity to cope with the unprecedented circumstance.

"It is estimated that almost 25 per cent of MSME loans could slip into default as several MSMEs are finding it tough to draw working capital from banks," the associations told the committee, as per the report, which was released on Tuesday.

Expressing concern over the grim situation of small enterprises due to the COVID-19 pandemic, the committee has recommended that to ensure the survival of small enterprises, it is imperative for the government to provide them with much-needed liquidity support to keep their businesses running and generate job opportunities for the workforce.

It said that a detailed study needs to be conducted to make an assessment of the actual losses suffered by the MSME sector so as to chalk out an effective plan for revival of the sector.