Union budget: MSMEs want an extension of the ECLGS calendar for another year
New Delhi, January 20 (KNN) As the countdown to the Union Budget 2022-23 has begun, the Micro, Small and Medium Enterprises (MSME) sector has placed hope on the government for an increase in budgetary expenditure for their sectors.
The pandemic has led to business losses and the disrupted supply chain has destabilized the business ecosystem. The government budget allocation for 2021-22 to MSMEs was Rs 15,700 crore compared to Rs 7,572 crore in 2020-21.
Pradeep Multani, Chairman of PHDCCI, has suggested an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) schedule for another year, until March 31, 2023. The chamber also wants the extension of the reduced rate of guarantee good execution at 3% for one more year until December 31, 2022.
ECLGS was launched by the Government of India as a special scheme in view of the Covid 19 crisis. The ECLGS provides 100% guarantee cover to banks and NBFCs to enable them to extend credit facilities from emergency to businesses and MSMEs in view of Covid 19 to meet their additional term loan and additional working capital needs.
“We appreciate the reduction in corporation tax from the top rate of over 30% to an effective rate of around 25%. However, we suggest a tax reduction for MSMEs working as sole proprietorships and partnerships. For these companies, the maximum tax slab should be reduced to 25%.
For new units, the effective rate is approximately 17%, so we suggest that to allow entities to benefit from Section 115BAB, the time allowed to begin manufacturing with a new unit may be extended by at least one period. 24 months — the new unit will be cleared to begin manufacturing by March 31, 2025,” Multani said.
The Federation of Indian Micro, Small and Medium Enterprises (FISME), the apex body of MSME associations in the country, has pointed out that the pandemic has had a negative impact on SMEs and many accounts have turned into unused assets. performing (NPA), even with an extended NPA classification. from 90 days to 180 days.
As the guarantee and guarantee generally remain in full use in MSMEs, the inability of the promoter to provide additional guarantee during restructuring becomes a serious handicap. For units affected during the Covid pandemic, FISME suggests, the government can extend 100% warranty coverage for the extra security needed for restructuring.
It also indicates that while measures such as the Emergency Credit Line Guarantee Scheme (ECLGS) have helped many MSMEs, several of them have remained outside the support system.
Animesh Saxena, president of FISME, suggests that branch managers should be empowered to decide on restructuring proposals by giving them the flexibility to go beyond benchmarks. Such relaxation is necessary where there is a deviation from standard benchmarks on days of inventory, days of debtor and margin requirements, among others.