{"id":23627,"date":"2021-01-07T12:46:42","date_gmt":"2021-01-07T07:16:42","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=23627"},"modified":"2021-01-07T12:47:13","modified_gmt":"2021-01-07T07:17:13","slug":"initiatives-taken-by-the-government-for-msmes-in-wake-of-covid-19","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/initiatives-taken-by-the-government-for-msmes-in-wake-of-covid-19\/","title":{"rendered":"Initiatives Taken By the Government for MSMEs in Wake of COVID 19"},"content":{"rendered":"\n

At present, our country is in\na state of chaos due to the ongoing pandemic. COVID 19 has not only hampered\nthe financial standing of the country but also eroded the GDP resulting in the back\nlashing of many important sectors including MSME.<\/p>\n\n\n\n

At present, the situation of\nMSMEs is not on-par as the majority of them encountering the liquidity crunch\nand low capital issues. The Finance Ministry under Modi governance had taken\nsome crucial measures to combat this serious threat. In this article, we would\nexplore the number of initiatives taken by the government for MSMEs in wake of\nCOVID 19. <\/p>\n\n\n\n

List of Initiatives Taken by the\nGovernment for MSMEs<\/h2>\n\n\n\n

This portion broadly\nexplains each and every initiatives taken by the government for the betterment\nof MSMEs<\/p>\n\n\n\n

Rs 20,000 Crore Subordinate Debt for MSMEs<\/h3>\n\n\n\n

This scheme was rolled by the\ngovernment for the MSMEs dealing with equity crunch and low revenues. It seeks\nto impart flexibility to the promoters of the existing MSMEs which are in the\nmiddle of chaos and have become NPA as of April 30, 2020. According to the\nscheme, the promoters are eligible for the credit equal to 15% of the stake in\nthe entity or Rs 75 lakh, whichever is lower. This is one of the prevalent initiatives\ntaken by the government for MSMEs.<\/p>\n\n\n\n

50,000 crore Equity Infusion via MSME Fund of Funds<\/h3>\n\n\n\n

On May 13, 2020, the finance\nministry came up with another growth-oriented scheme for the stressed MSMEs\ngiven COVID 19 pandemic. Under the scheme, a corpus of Rs 10,000 crore was set\nup by the government for MSMEs to encounter a financial crisis or shortage of\ncapital. The scheme also encompassed those entities which are in the compromising\nstage and unable to raise funds through professional corporations and venture\ncapitalist. <\/p>\n\n\n\n

Rs 3 lakh crores Collateral free\nLoans MSMEs<\/h3>\n\n\n\n

As COVID 19 was quite\nrelentless on the economy, it chopped off major sources of revenue for the\nMSMEs. This left the sector helpless as they continued to face the scarcity of\nfunds. But, GOI responded promptly to this serious threat by launching Rs. 3 lakh\ncrores scheme. <\/p>\n\n\n\n

The scheme aims to provide much-needed resilience to the stressed MSMEs through the allotment of Collateral free credits<\/strong>[1]<\/strong><\/a><\/sup>. This scheme enabled the MSMEs to compensate for the ongoing liquidity crunch and meet the demand for production.\u00a0This indeed was one of biggest initiatives taken by the government for MSMEs till date. The scheme was launched under the Atma Nirbhar Baharat package in May.<\/p>\n\n\n\n

Introduction of Udyam Registration for New\nRegistration of MSMEs<\/h3>\n\n\n\n

This step was taken to ease out the registration process for new entities looking to avail of MSME registration<\/strong><\/a>. Compared to the past method, the current procedure for MSME registration is easy and very intuitive. Entities seeking MSME registration are now required to visit the official website of MSME known as Udyog Registration. <\/p>\n\n\n\n

Upon reaching the portal, the\napplicant needs to provide the Aadhaar Card number to get access to the\nweb-based form (also known as the application for MSME Registration). This\nis the smartest initiatives taken by the government for MSMEs. <\/p>\n\n\n\n

Restriction on the Global Tender\nProcurement <\/h3>\n\n\n\n

On May 13, the finance\nministry took an important decision in regards to the limitation on the global\ntender as a part of the Atmanirbhar Bharat package. According to the\nannouncement, the procurement of the overseas tender has been capped at 200 cr.\nThat is the minimum threshold limit for all the existing MSMEs. The scheme was\nrolled to safeguard the MSME sector from unfair competition from overseas\ncounterparts. <\/p>\n\n\n\n

Core Issues Faced By the MSMEs in Wake of COVID 19 Pandemic<\/h2>\n\n\n\n
\"ssues<\/figure><\/div>\n\n\n\n

Following list exhibits the number of prevalent issues faced by the MSMEs during COVID 19 pandemic.<\/p>\n\n\n\n

Liquidity Crunch <\/h3>\n\n\n\n

The most obvious obstacle\nthat becomes prominent soon after the advent of COVID 19. MSMEs’ contribution\nto the economy is somewhat unparallel as compared to other sectors. While the\npandemic was too drastic for the economy, the MSMEs operating pan India was\nfinding it hard to cope up with its adverse effect. <\/p>\n\n\n\n

There was a time when\neverything was at a halt due to this pandemic and MSMEs were struggling to meet\nthe production demand due to liquidity crunch. As per government sources,\nalmost 90% of the MSMEs, smaller ones in particular hardly manages to complete\nthe daily production target due to the unavailability of funds and necessary\nresources. <\/p>\n\n\n\n

Shortage of Raw Material and Other\nEssential Inputs<\/h3>\n\n\n\n

MSME is facing the shortage of\nthe raw materials as they are dependent on the raw materials imported from the\nmultiple countries and due to the COVID-19 virus both the export & import\nof raw materials have been disrupted creating widespread scarcity <\/strong><\/p>\n\n\n\n

Absence of Manpower<\/h3>\n\n\n\n

No sector can maintain a\nsustainable production level without skilled laborers. They have continued to\nremain the major contributor for the companies, especially MSME. But after the\narrival of the COVID 19 everything was changed since the majority of the\nlaborers were forced to remain at home, leaving the industrial sector to face\nthe biggest scarcity of manpower of all times.<\/p>\n\n\n\n

Deteriorated Demand<\/h3>\n\n\n\n

Covid 19 emerged as an\nunprecedented threat to human life and the global economy. It not only\nsabotaged the purchasing power of the consumer but also disrupted the\nsupply-chain mechanism. Due to this, the manufacturer was finding it hard to\nraise the demand for their product. <\/p>\n\n\n\n

Escalating Operating Cost <\/h3>\n\n\n\n

Since Covid 19 virus causes\nthe widespread scarcity of resources, the MSMEs operating nationwide encounter\na sudden dip in the production volume that further translated into low revenue\ngeneration followed by rising operating costs. <\/p>\n\n\n\n

Conclusion <\/h2>\n\n\n\n

There is no doubt that MSMEs\nare confronting the relentless economic crisis at present despite the launch of\nample government schemes. Although the government is trying its best to contain\nthe after-effects of the Covid 19 pandemic, there are still many gaps that need\nto be filled. <\/p>\n\n\n\n

We hope that the Government will come up with initiatives that can bring the affected MSME sector back on track as anticipated. Share us your views or queries related to this topic i.e. initiatives taken by the government for MSMEs. <\/p>\n\n\n\n

Read our article<\/b>:\nWhat is the Threshold Limit of MSME before and after Covid-19 Raised by the Government?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"

At present, our country is in a state of chaos due to the ongoing pandemic. COVID 19 has not only hampered the financial standing of the country but also eroded the GDP resulting in the back lashing of many important sectors including MSME. At present, the situation of MSMEs is not on-par as the majority […]<\/p>\n","protected":false},"author":22,"featured_media":23633,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[1402],"acf":{"service_id":"71"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3221,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/23627"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=23627"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/23627\/revisions"}],"predecessor-version":[{"id":23641,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/23627\/revisions\/23641"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/23633"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=23627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=23627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=23627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}