Congress president Sonia Gandhi on Saturday urged Prime Minister Narendra Modi to announce a financial package of Rs 1 lakh crore for the revival of the MSMEs, saying if ignored, the financial crisis in the sector can have a devastating and expansive ripple effect on the country''s economy.
In a letter to Modi, Gandhi also made some suggestions for the revival of the Micro, Small and Medium Enterprises (MSMEs), which is reeling under the adverse impact of the lockdown due to coronavirus.
She urged the prime minister to announce a Rs 1 lakh crore "MSME Wage Protection" package as also a credit guarantee fund of an equivalent amount, besides a 24X7 helpline for helping them out of this crisis.
This is the seventh letter written by Sonia Gandhi to the prime minister highlighting several issues arising out of the lockdown, and making suggestions on problems faced by migrant workers and the poor, besides on revival of MSMEs.
While highlighting the crisis, she said the MSME sector is suffering around Rs 30,000 crore loss every day due to the lockdown and efforts should be made to help revive them as they are the backbone of the economy.
"If ignored, this issue has the potential of having a devastating and expansive ripple effect on our economy," she said in the letter, and added it was an economic concern that needed immediate attention and intervention of the government.
Gandhi said the MSMEs contribute close to one third of the nation''s GDP and account for almost 50 pc of our exports while employing over 11 crore people.
"At this moment, without appropriate support, more than 6.3 crore MSMEs stand on the verge of economic ruin. Every single day of the lockdown comes at a cost of Rs 30,000 crore to the sector. Nearly all MSMEs have lost sales orders, seen a complete cessation of their work, and have had their revenue negatively impacted by the lockdown," she said.
"Most worrying of all, the 11 crore employees...are at the risk of losing their jobs as MSMEs struggle to pay their wages and salaries," she said.
The Congress chief asked the government to announce a Rs 1 lakh crore "MSME Wage Protection" package, which would go a long way in shoring up these jobs, boosting morale as well as greatly alleviating the predicted economic crisis.
"Establish and deploy additional credit guarantee fund of Rs 1 lakh crore. This is necessary to provide immediate liquidity to the sector and ensure adequate capital is available to MSMEs at a time when they need it the most,"she said.
Gandhi also noted that the actions taken by the RBI must get reflected in actions by commercial banks to ensure adequate, easy and timely credit supply to MSMEs, and monetary action at the RBI''s end must be supported by sound fiscal support from the Government.
She also demanded that the measures need to be supported by an extension of the RBI''s moratorium on payment of loans for MSME beyond the stipulated period of 3 months.
The Government should also explore a waiver/reduction of taxes for MSMEs and other sector specific measures, she said, adding that high collateral security is leading to denial of credit.
"This is a case where timely and decisive action can make all the difference." she told the PM, while extending her party''s continued constructive support in the fight against COVID-19.
Meanwhile, former finance minister P Chidambaram tweeted "we are still awaiting FAP II (financial package) promised by Nirmala Sitharaman exactly one month ago. Meanwhile, the MSME blueprint is Congress contribution to re-start the economy. I hope the government will act on the blueprint."
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