SMEs/ MSMEs and Rural Agriculture Reforms Needed to Uplift the Economic Slowdown

India's unemployment rate hit 26% and 14 crore people lost employment as per CMIE data released recently. This is the single largest blow to the economy, thanks to prolonged lockdown in the wake of COVID-19 outbreak, and greatest and gravest threat to the demographic dividend that is (was) our strongest point. Against this background, if any sector can help mitigate it to a great extent, it is the Micro, Small and Medium Enterprises (MSME) along with the agriculture sector. 

In context to the same, Mr. Sandip Chhettri, COO, TradeIndia says, "MSMEs contribute to 29 per cent of GDP in the country and employs over 12 crore people. MSME businesses are usually a month-to-month operation, with little reserves for the future. A disruption like this might just mean restarting everything. The biggest worry is, of course, a liquidity crunch, followed by a disrupted supply chain, labour availability and regulatory issues that have affected the MSME sector.Government must look at providing loans to cover wages, suspension of contributions to employee’s provident fund and Employee State Insurance Corporation (ESIC) for six months. And must clawback of GST that has already been paid.  They also much look at  creating liquidity by clearing dues from government departments, public sector undertakings, GST refunds and fast-track the process of tax refunds MSME must be given easier access to bank loans, especially at low rates, with help from the state and central governments"

Similarly, Mr. Amith Agarwal, Co-Founder & CEO, AgriBazaar shares, "The government’s push to bring maximum farmers online for their agri-purchase and crop selling is a decisive move. Any government policy like agri-produce insurance that guarantees the farmer that his crop will get purchased by the government at a fair price will be in line with India’s ensuring its long-term food sufficiency policy. In the ensuing season, farmers should get liberal financial assistance to purchase seeds, fertilizers and other agri-inputs so that they don’t waste one entire crop-cycle.Second, though a bold move, the government should ensure agri-tech start-ups enjoy ‘zero Income tax’ status similar to agriculture income. By recognizing agri-tech start-ups in the same line as agriculture, the government will spur deep investments and innovation in this sector. Today, the only solution to India’s agri woes is localized technology interventions that are relevant for the small farm owner or agri-landholder. Farm sector should be treated as a priority sector not only by banks but across regulators like credit rating agencies."

He further adds, "Once agri-start-ups start to benefit from the government similar to agriculture income, it will open up serious investment opportunities. The larger goal of food security, self-reliance in crop production and minimizing our food import bill will get automatically addressed through this measure. In a post COVID19 world, agri-tech should be used to restart the agri-economy in a fast-track manner"