The government’s decision to inject stimulus in Micro, Small and Medium Enterprises (MSMEs) is not only meant to help them recover from the pandemic crisis but also encourage them to contribute to the overall goal of creating a $5 trillion economy by 2024. Union Minister of State for Finance Anurag Thakur, discusses his government’s reform measures in conversation with Rajat Mishra.
All India Manufacturing Association’s (AIMO) recent survey showed 78 per cent of the MSME do not see any hope of recovery despite the government’s stimulus package. Instead, they expect other forms of assistance. What is your view?
Whatever decision has been taken in the past was done after due consultations with industry leaders. It is too early to comment anything because many sectors have resumed work only a few weeks ago. We are closely monitoring the progress of Rs 3 lakh crore emergency credit line announced under ‘Atmanirbhar’ package, on a weekly basis. A portion of the funds has already been sanctioned and disbursed. This clearly indicates the scheme has taken off. We need to wait for the demand to improve. The disbursement will be much more in the coming days.
The MSME is one of the hardest hit sectors. Could we say this is not the only measure the government is going to take?
During this pandemic, nobody can say what tomorrow holds for you. You need to look at how the situation pans out. We are interacting with various industry leaders and things have started moving. It takes a lot to restart economic activity of a huge country like India, after months of complete shutdown.
If we look back at 2014, when we took over from UPA, we may have had taken some time to begin with, but the next five years saw over 7.5 per cent growth.
Even now our policy decisions include measures for future reforms. We will see the impact in the coming months.
Recently, Piyush Goyal had asked real estate developers to reduce prices and sell their inventories without waiting for the market to improve. He also added that there would be no bailout package. What is the government’s official stand?
It is up to the industry. They should look at it from project to project basis and how much would the inventory cost, or even what have to be amended, or the bank’s position. I cannot comment because the department has not taken any call on the subject. Goyal is a senior leader and he may have expressed his views.
Credit rating agency Crisil has said bank credit growth will decline to a multi-decade low of 1 per cent. Do you think that taking credit will be a big hurdle in implementing the government’s liquidity package?
In situations like these you will see many hurdles, but the issue is whether the government is active. And when you take any decision to help the industry and economy to grow it is not only to revive but also to achieve our target of $5 trillion by 2024. The government is monitoring bank loan disbursement on a day-to-day basis and companies are coming forward to seek the benefit of these initiatives. The entire corpus of `3 lakh crore emergency credit line is to be disbursed until October 31. It is going to be utilised much before that.
Do you think the government must change its deadline of 2024 to achieve a $5 trillion economy, as the pandemic has created a havoc?
Not really, because our intention should be focused on how to take advantage of the geopolitical situation or favourable conditions for India. So, India should work in that direction not only to look at the revival but look at the target of $5 trillion by 2024. As it is an extraordinary situation, we are trying to take extraordinary steps.
How do you plan to discipline banks that showed reluctance in implementing the liquidity programme?
We are monitoring every activity on a weekly basis. The finance minister is regularly meeting with the public sector banks. They have been clearly told to come up with every detail on how much loan they have sanctioned so far under this scheme.
Could you tell us how the government plans protect banks from NPA, arising out of this collateral-free loan plan?
There is a 100 per cent guarantee from the government and the banks should not fret but give 20 per cent of the additional working capital to existing account holders. They should disburse money as early as possible to help businesses revive, including MSMEs.
Given the large scale damage done by COVID-19, do you see several other announcements from the government or a big bang reform measure?
I have already said you do not know what the future holds for you. If you look at the first step, we gave industry a relaxation in compliance burden. The second step we took was Pradhan Mantri Garib Kalyan Yojna, where food grain and money problem was sorted. Later, we decided on an economic package - Atmanirbhar Bharat - where not just liquidity but reform measures have been taken
There is a likely shortfall in GST collection. How does the government plan to compensate states? Was there any discussion on the same in GST council meeting?
We have taken it up in the last GST council meeting among various stakeholders that all states and union territories could come up with the idea on what could be done. A special meeting will be held with state governments just to discuss this issue for an amicable solution.