The Uddhav Thackeray-led coalition government has taken up a proposal for protecting the salaries and wages of employees of small, micro, and medium enterprises (MSMEs) in the state. Estimating the losses suffered due to the lockdown by the industry sector in Maharashtra to be over Rs 1 lakh crore, senior officials said, a proposal for paying up to two months of basic salaries and wages for the MSME staff was under consideration.
Maharashtra, India’s most industrialised state, has 17 lakh registered MSMEs that provide direct and indirect employment to nearly 1.5 crore people. Of this, the manufacturing sector, among the worst hit by the lockdown, alone account for six lakh units.
According to government estimates, nearly 94 per cent of the operational factory units (34,501 of 36,623 registered factories) in the state had stalled production following government-enforced restrictions. After the lockdown measures were eased for non-infected parts on April 20, a total of 4,500 units resumed production activity till April 28, while 15,846 applied for permission to operate, stated an official release of the state-run Maharashtra Industrial Development Corporation.
While a committee of serving and retired bureaucrats, appointed by Chief Minister Uddhav Thackeray, is still measuring the economic impact of COVID-19 and way to revive it, senior officials said small businesses in the state have taken the maximum hit due to supply-chain disruptions, with steel, real estate, and textile industries being the worst affected.
Senior officials said the state’s Industries department has proposed that the government spend Rs 800-Rs 1,000 crore as an incentive to MSMEs that do not lay off their staff. “The proposal is to reimburse such business for up to two months of basic salaries and wages paid,” said a senior official.
The state’s proposal comes at a time when a group of 11 MSMEs have petitioned the Supreme Court to allow them to pay workers 70 per cent less during lockdown and sought a direction for the government to pay the rest of the fund from the PM cares fund. On Wednesday, former Union Finance Minister P Chidambaram also urged the Union government to come up with a scheme to protect the salaries and wages of 12 crore people employed by the private sector.
In another measure to cushion the impact for the small and medium businesses, the department has also proposed that the state government bear up to five per cent interest on existing and fresh capital loans availed by MSMEs for a year. It has also proposed the electricity duty be waived off for all industries, including major ones, for the March-June period, but the state’s energy department has reportedly opposed the suggestion.
On Monday, the state Cabinet had introduced a provision to enable traders more time to pay GST dues.
The department has now proposed that traders be given an additional six-month time for meeting various deadlines and compliances.
These concessions, collectively, are expected to cost Rs 3,500-4,000 crore. With the state’s own revenues adversely hit, a senior finance department official said, the availability of funds to provide such sops would be an issue. The state has estimated its own revenue loss for the lockdown period to be over Rs 42,000 crore.
“We are hoping that the Centre itself announces similar schemes nationwide. This will reduce our burden,” an official said.
In order to infuse fresh capital, a proposal to approach the Reserve Bank of India for directing banks to grant 20 per cent additional loan to all eligible industries without seeking fresh collateral is being considered by the state government, said officials. Meanwhile, Maharashtra is planning to prioritise capital investments in the roads, irrigation, and other infrastructure sectors in public sector to spur growth.
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