Economic Undertakings

Assocham calls for salary support, interest subsidy and other measures to enable MSMEs to cope with COVID-19 challenges

Assocham calls for salary support, interest subsidy and other measures to enable MSMEs to cope with COVID-19 challenges

New Delhi, June 4 (KNN) Industry body Assocham has recommended that the central government consider a mechanism to support wages and an interest subsidy for MSMEs who are reeling from COVID-19 which showed its heightened fury in the second wave.

Even if states are easing blockages, commerce and industry would need full support to resume their common thread, after the halt or virtual halt of their operations since mid-April, Assocham said in his recommendations. report to government on Wednesday.

Fighting for job protection, he said: “Surplus funds from the National Insurance Company of Employees (ESIC) should be used to provide wage support measures / stimulus programs for employees.”

Assocham secretary general Deepak Sood said wage and job protection measures have been further extended by several countries, including the United States. After all, consumption, especially non-discretionary, must be ensured by protecting people’s incomes even during periods of lockdown. Government intervention is crucial.

“It’s time to support and spend without focusing too much on the tax parameters. I’m sure the RBI and the government are constantly working on innovative solutions to keep pumping money into the system despite pressure on revenues. understandable, ”he added.

Sood spoke of the industry’s latest interactions with Trade and Industry Minister Piyush Goyal, who said the government is reaching out to all key stakeholders to deal with the extraordinary situation resulting from the century-old pandemic. Sood also welcomed the RBI’s announcement to include hospital infrastructure such as oxygen plants in the Emergency Line of Credit Guarantee Program (ECGLS), which is expected to see at least double its current cap of Rs. 3 lakh crore.

“The government’s emphasis on ease of doing business and competitive manufacturing must go beyond reforms of the electricity law, unified tariff and unbundling of natural gas, the removal of old laws. and redundant so that we can have a fantastic economic rebound after the pandemic, ”he added.

The chamber study also asked for an interest subsidy for commerce and industry so that they could revive themselves with minimal disruption. He said the government and the RBI should “consider an interest subsidy scheme with validity until March 31, 2022, especially for the micro and small business segment. Likewise, NPA standards should be relaxed for MSMEs, if not for all industries. cash cycles have been affected and companies have not been able to realize their receivables on time, it would be useful to provide for a one-off relaxation in the recognition of APMs, extending the overdue standard from 90 days to 180 days ” .

At the same time, Sood said now is the time for India to focus on improving the ease of doing business and competitive manufacturing, with reforms to the electricity law, tariff unified and unbundling of natural gas, among others. There are many outdated laws, which must be immediately repealed, to help the economic rebound after the pandemic.

The Law Commission of India’s Third Interim Report, as part of its study titled “Legal Promulgations: Simplifications and Streamlining,” listed many old and redundant laws such as the Sick Textile Enterprises Act 1972 ( management), the Gift Tax Act of 1958, the Local Pensions and Free Authorities Act 1919, among others.

The newspaper also expects the RBI to continue its accommodative stance on policy rates at the next Monetary Policy Committee meeting following unexpected rage from the second wave of the pandemic.

The document also called for changes to the Insolvency and Bankruptcy Code (IBC) to allow existing business promoters to participate in stimulus offers for companies riddled with debt affected by insolvency proceedings.

“As the industry demands an extension of the NCLT moratorium until March 31, 2022, the government should also consider withdrawing sec29A when the sponsor cannot take its assets,” he said.

For industries to restart, new guidelines will need to be issued to protect their lives and livelihoods. Standard Operating Procedures for Industries will help businesses operate across state borders and regions. Inputs should be sought from all stakeholder groups, taking into account the operational structures of various industries. The government should work towards creating transport bubbles so that businesses can operate, safely managing the transportation of employees and other resources.

To alleviate the hardest hit hospitality industry, the document suggested allowing the GST entry credit for restaurants: The restaurant industry is the only industry that is not allowed to claim credits. tax under the current GST regime. This undermines the stated goal of bringing more businesses into the organized fold and sharply increases capital spending.

Alternatively, the government should offer an option of double tax structures – 5 percent with no GST entry or 12 percent with authorized GST entry credit.

To give the real estate industry a much needed boost, he recommended cutting stamp duty and property tax in half for at least three years.

The economic situation induced by the pandemic may require restructuring of some struggling companies, including a takeover, for their rapid recovery. It is recommended that stamp duties and other levies on corporate restructuring transactions be standardized in all states at 1% of the value of the relevant transaction, subject to a maximum levy of Rs 10 crore per state. .

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