India Inc has a long wishlist but first wants to know how much govt can spend

India Inc has asked the government to lay out a medium-term fiscal roadmap to help industry seek stimulus or concession accordingly as it gears up for pre-budget consultations. At a meeting of the Amitabh Kant-led empowered group on Tuesday, the Confederation of Indian Industry has asked the government to extend the unutilized funds under the emergency credit line guarantee scheme (ECGLS) to stressed sectors besides allowing alternate investment funds to function as multiple bad banks and recapitalisation of public sector banks.
“Industry is in a tight spot. Stressed sectors are in need for a stimulus. However, the industry is aware that the government lacks funds. Hence, the industry is seeking a fiscal roadmap from the government so that we can ask for sops and concessions accordingly,” an industry representative present at the meeting said. The meeting was held to chalk out strategies for reviving the economy and strengthening domestic supply chains.

The Confederation of Indian Industry suggested the government extend coverage under ECGLS to stressed sectors, including civil aviation, hospitality and tourism and construction sectors, who can avail of the unutilized funds under the scheme.

Industry estimates that out of the Rs 3 lakh crore allocated to the Emergency Credit Line Guarantee Scheme to provide liquidity guarantee to the MSME sector, barely Rs 1.5 lakh crore will be used till the cut-off date of October 31.

Other suggestions of CII include recapitalisation of the public sector banks, enabling AIIFS to function like multiple bad banks and extending the Merchandise Exports from India Scheme (MEIS) benefits up to December 31, in its present form with a rider that the balanced funds (60 percent shortfall) would be disbursed later (with in a fixed agreeable time-period) as and when government’s finances improve.

“This will help address the accounting problem of exporters as they can book the receivables under MEIS in the current financial year,” it said, adding exporters be allowed to use this deferred MEIS disbursement as a collateral to secure loans from commercial banks.

The MSME industry, on the other hand, raised four key issues pertaining to liquidity, lack of demand for MSMEs, public procurement through MSMEs, and delayed payments with various central government agencies.

Industry sources present at the meeting said that the government officials have assured the industry that the Centre is keeping a close watch on the rule whereby 25% procurement from MSME by PSUs is mandatory.

Among interventions suggested by industry body Federation of Indian micro, small and medium enterprises (FISME), is mandatory registration of all Govt (center & state) buyers on TReDS platforms, and allowing insurance companies to offer bank guarantees.

“All government purchaser (s) (central or state) must register and upload invoices of suppliers to bring transparency and discipline for timely payment,” FISME said.

FISME also proposed interventions for the informal sector, including dual use of residential areas to facilitate self-employed people to work from home for most activities, uniform electricity tariff irrespective of its use in residential areas.

“We have been asked to submit our suggestions, following which the government will revert after internal discussions,” said an MSME industry insider present at the meeting.

CII has also sought better coordination between centre, state and city authorities on adhoc lockdown and opening up as it affects supply chains and is impacting recovery. A CII survey on 120 CEOs with operations spread across 20 states and three union territories show 77% of them reported adverse impact on revenue as well as profits due to adhoc lockdowns.

“About 61% of the companies reported that adhoc lockdown would impact their revenues upto 50% and 48% of them also reported that their profits would be impacted upto 50% due to the adhoc lockdowns,” it said. .

Representatives of CII, FiCCI, MSME, Fisme were present at the meeting along with officials of NITI Aayog, MSME ministry, department for promotion of industry and internal trade, ministry of commerce and ministry of finance.