MSME is an abbreviation of Micro, small, medium enterprises working in our country. This stratum of business is the trigger of India’s economy. Most of our country people are indulged in MSME businesses and future still revolves around these businesses. Enterprises engaged in manufacturing and service i.e. processing, production, preservation and service rendering are termed as MSME under the 2006 Act.
What is the MSME 2006 Act?
According to the Act of Parliament 2006, “ any buyer who fails to make payments to MSME on agreed terms or 45 days is liable to pay monthly compounded interest three times more than RBI notified rate.” The act was bought in action to empower small, micro and medium enterprises and offer government aid to them. Promotion and facilitation of the enterprises is the main aim of the act.
Benefits of MSME Registration:
- Helps for lower interest rates
- Exemption under Direct tax laws
- ISO certificate expenditure compensation
- Easier to get licenses, registrations and approvals
- 15% import aid for fully automatic machine
Empowering the enterprises helps in building the economy, hence government aid is necessary to uplift these enterprises.
The Pandemic Effect
Since the lockdown, businesses are severely suffering to boost their businesses. The halt of every business operation led to economic downfall in the past few months. MSME’s are the most vulnerable to the lockdown decision and are struggling to keep their business afloat. Layoffs and salary cuts and zero payments to vendors have a led spurge in shutting down businesses.
A closer understanding states the unfortunate condition of the enterprises irrespective of the field of work. With the nationwide crisis of migrant workers, we can conclude that MSME’s is the worst hit due to the outbreak of COVID-19 in India.
The pandemic has raised questions to already unanswered queries of the owner of small enterprises. The future seems uncertain for millions of Indians working in the MSME sector. India’s economy has faced backlash amidst the pandemic and future seems bright only if people and government coordinate and work unanimously for a better economically stable country.
Government Aid For The MSME’s
MSME’s are facing a hard time in order to pay their workers, waive off loans, pay interests and are on the edge of shutting down their businesses. Government is in a fix for providing aid for the healthcare sector and working for the betterment of the MSME sector.
Government aid amidst the pandemic under FM Nirmala Sitharaman:
- The date for completing payment was postponed to June 30, 2020, without any interest or late payment.
- Holding board meetings relaxation up to 60 days and will be continued till the next two quarters.
- The filling of GST was postponed to June 30, 2020, without any interest or late fee penalty for enterprises with turnover less than 5 crores. But enterprises with a turnover of more than 5 crores will have to pay 9 per cent.
- All income tax payments also postponed to June 30.
Also, SBI and other organizations also came to aid the struggling people. SBI started an emergency aid that helps COVID affected MSME. The scheme is formalized according to like lenders can provide 200 crores or more and loans will be sanctioned at 7.25 interest rate. Lenders can also provide 10 per cent of their funds currently.
Many other countries have also designed programs to relive sectors amidst the pandemic and it is extremely important for governments to look after the economical grounds for their countries.
The given aid is not enough for MSME’s to survive the pandemic. The government should consider other ways to relieve the stress building in the extended lockdown. Though the unlock has started it is largely risky for people to head out for work and start operations with full swing. Hence, it is expected by the government to bring more aid to the suffering MSME sector.