The Indian government’s stimulus package announced last year has proved to be inadequate in boosting economic revival, according to a report by the parliamentary standing committee on industry tabled in the upper house (Rajya Sabha) recently. The panel urged the government to come out with a larger package to help revive the economy and small businesses.
The larger economic package should be aimed at bolstering demand, investments, exports and employment generation, the panel recommended.The Indian government's stimulus package announced last year has proved to be inadequate in boosting economic revival, according to a report by the parliamentary standing committee on industry tabled in the upper house (Rajya Sabha) recently. The panel urged the government to come out with a larger package to help revive the economy and small businesses.#
“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,” the panel was quoted as saying by Indian media outlets.
To mitigate the stress induced by the COVID-19 pandemic, the government announced a ₹3 lakh crore Emergency Credit Line Guarantee Scheme for micro, small and medium enterprises (MSMEs). This was part of the ₹20 lakh crore stimulus (Aatmanirbhar Bharat Abhiyan) package announced last year. The amount to be guaranteed was increased to ₹4.5 lakh crore last month.
Loan guarantees have been issued to about 10.9 million small businesses, MSME minister Narayan Rane informed the Rajya Sabha during the ongoing monsoon session of parliament.
The committee said the second wave exposed the vulnerabilities of MSMEs, which faced issues like delayed payments, low financial resilience and raw material scarcity. It recommended carrying out a detailed study on the losses suffered by MSMEs to chalk out an effective revival plan for them.
The committee observed that several central ministries, government departments and central public sector enterprises had not cleared their MSME dues within 45 days. The panel said the 1 per cent penalty clause on such delays should be used to encourage timely payments.
Finance minister Nirmala Sitharaman said on July 26 that the Centre will clear all dues to MSMEs within 45 days. Delayed payments to the tune of ₹22,315.95 crore to small businesses were yet to settled as of July 27.
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