Answer 5) : Technology

ANSWER 5)
 Micro, Small and Medium Entreprises (MSME) players in the country have called for urgent
measures by the government, such as extension of deadline for filing GST, among others, to
help the industry survive.They are asking to exempt the EMI’s for three months
 Manufacturers should be allowed to resume operations in areas that aren’t classified as
coronavirus disease (Covid-19) hotspots and where the virus hasn’t spread widely, subject
to the condition that they strictly follow sanitation and social distancing norms to curb the
spread of the outbreak, says the ministry micro, small and medium enterprises (MSME) .
 To assist India’s medical-strategy against the coronavirus, Technology Centers belonging to
the Ministry of Micro, Small and Medium Enterprises (MSME-TCs) are working on ‘mission-
critical products’ or ‘vital medical kits’ to cater to the needs of the health emergency.The
services of MSME-TCs have been engaged by the ministry, following the directions given by
the Government of India, in order to produce essential medical items on mass-scale or
adequate numbers using their technical know-how.
 More than 81% MSMEs are self-financed with only around 7% borrowing from formal
institutions and government sources (Economic Census, 2013). Credit market interventions
(cheaper loans, increased limits on NPAs) therefore may not benefit this sector directly.
Since most MSMEs primarily operate on cash, they require immediate liquidity to cope with
adverse events. Moreover, many micro enterprises are small, household-run businesses.
Hence, more direct measures of liquidity may be the need of the hour, similar to the
initiative of the Confederation of Indian Industries (CII) that sets up a fund targeted directly
at easing the liquidity constraints of MSMEs.
ANSWER 6 )
 In line with the global response, the Government of India slashed interest rates, increased limits
on Non-Performing Assets (NPAs) to prevent triggering insolvency, and offered payments from
the government’s share of Employee Provident Fund (EPF) to avoid layoffs. Several leading
banks have announced special purpose loans at reduced rates for up to 10-20% of the firms’
working capital limit.
ANALYSIS
According to the Economic Census data, over 95% of firms (over 55 million firms) employed
fewer than five workers, and 94% were not registered with the government. Thus, it is unlikely
that these small firms contribute to EPF and may not benefit from the Government’s
contribution to EPFO.
 The RBI has mercifully pushed for a three-month loan moratorium. While this is
necessary, it is hardly sufficient given the unfolding scenario and considerable uncertainty
regarding when economic activities can resume full time.
 The Government of India has already appealed to MSMEs producing medical and other essential
products to register and sell in the Government’s e-marketplace. This should be expanded to
other sectors as well with co-ordination across different states to meet local supply and demand
requirements.
 Following suit, Uco Bank, Indian Bank, Bank of India, and Union Bank of India have also
announced emergency credit lines for their existing MSME borrowers. Indian Bank has offered 5
special COVID-19 emergency loan schemes for its all types of customers from pensioners, to
salaried class, self-help groups, MSMEs as well as large corporates. Borrowers can avail of a
salary loan of up to 20 times of his/her last drawn monthly gross salary, up to Rs 2 lakh.
Emergency pension loans can also be availed by senior citizens, up to 15 times their monthly
pension, capped at Rs 2 lakh. These special loans will come with a tenure of 5-years at zero
concessional interest or charges.
ANAYSIS
Firms need funds to stay afloat. Most in the B2B and export sectors are suddenly saddled
with a huge receivables problem. One way is for the government to come out with an
instrument similar to a working capital term loan that can be offered by banks to those
enterprises with whom they have an existing relationship. The government can fund the
banks with an earmarked fund line suitably structured as to not disturb the CRAR. Some
of the banks can be asked to co-lend with NBFCs in specific sectors as well. This kind of
facility should alleviate the pain endured by a good number of B2B segment enterprises
with banking and select NBFC relationships.
 Instant loans are generally for a short period of time for short-term expenses, offered by digital
lenders including MoneyTap, EarlySalary, LoanTap, PaySense, Qbera, etc. The amount of the
loan is offered up to a certain percentage of the borrower’s salary and comes with a tenure
ranging from 1-12 months. With the varying types of loans, some platforms offer around a 3-
month interest-only payment option to borrowers.
ANSWER 7)The segments of long term improvements are
1)Aviation industry
2)Retail industry
3

Answer 5) : Technology

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