New Delhi [India], April 29 (ANI): Congress leader and former Union Finance Minister P Chidambaram on Wednesday said that the Centre should provide two funds of Rs 1 lakh crore each for wage protection assistance and credit guarantee fund to MSME sector to help them tide over the COVID-19 crisis.
"The Congress party has submitted a proposal with specific, well thought out and concrete suggestions to help the 6.3 crore MSMEs. We urge the Prime Minister to look at that proposal and immediately announce the implementation of two specific recommendations - firstly, a Rs 1 lakh crore wage protection assistance to help MSMEs pay wages and salaries for the month of April and secondly, a Rs 1 lakh crore Credit Guarantee fund for MSMEs that will help them to go to the banks and borrow money," Chidambaram said.
Chidambaram quoted the Annual Report of the Ministry of Micro, Small and Medium Enterprises (MSMEs) stating that 11 crore people are engaged in 6.3 crore MSMEs in the country.
"These 11 crore people's livelihoods are in danger now because most of the employers are unable to pay wages or salaries. The businesses have had no sales this month and their payments to their vendors are also stuck, leaving the vendors also in distress. Large swathes of the private sector are faced with what economists call an extreme liquidity shock," he said.
"These businesses are also unsure about their future. They do not know whether they can continue their businesses or will be forced to shut down permanently. The time to make bold decisions to save the MSMEs is now. If businesses do not see hope, they will decide to close," he added.
Chidambaram suggested that the relief packages were crucial and the sector was in danger of dying in absence of any support from the government.
Further, for the non-MSMEs, Chidambaram suggested that the government should announce a Paycheque Protection Programme, similar to the one announced in the United States. This is not legislation but a financial assistance package, he said.
"According to the income-tax department, there are roughly 1 crore people with a salary income of less than Rs 3,50,000 a year or Rs 30,000 a month. Assuming an average salary of Rs 15,000 a month for these 1 crore people, the total cost comes to Rs 15,000 crore for the month of April. This is not a large sum to protect the livelihoods of 1 crore people who have filed tax returns and paid taxes in the past and can be easily found. The government must announce a Paycheque Protection Programme right away to protect the salaries of these 1 crore employees," Chidambaram added.
Chidambaram further suggested a waiver of employers' contributions to the Employees' Provident Fund (EPF) and Employees' State Insurance (ESI), on a temporary basis, for the next three months. This will assist in reducing the payroll costs of employers and retaining the workforce, he reckoned.
India is under a nation-wide lockdown till May 3 to stem the spread of coronavirus. (ANI)