CII seeks quick relief for MSMEs, recommends prioritisation of sectors for economic revival
The CII has recommended plans for calibrated opening of sectors, beyond the ones that are already operational given their essential categorisation.
The Confederation of Indian Industry (CII) on April 14, 2020 sought quick relief and measures to support the Medium and Small Scale Enterprises (MSMEs) in India.
The CII made few recommendations for a safe and calibrated lifting of lockdown to kickstart the economy.
Following are the key recommendations:
• Geographical classification of areas on the basis of colour- red, amber and green zones.
• Calibrated Opening of Sectors
• Stringent Health and Screening Systems
• Strong penalties for non-compliance on health and screening measures
CII recommendations: In detail
Revival of Economy
The CII has recommended an economic package to enable smooth exit from the lockdown by directing fiscal expansion to the bottom of the pyramid and offering enhanced credit to the industry through banks.
Key Suggestions for Economic Revival
• Provision of ration directly to support the distressed sections of the population.
• In addition, provision of shelter and meals for those in need.
• Simultaneous focus on industry with a target of increasing credit offtake to at least 14-15 percent by year end.
• Money can be infused to the industry through enhanced credit.
• The CII has recommended all banks to provide additional working capital to all companies, equivalent to their three-month salary or wage bill at an interest rate of 4-5 percent.
• Additional working capital for stressed sectors such as construction, tourism or aviation.
Phase-wise opening of Sectors
The CII has recommended plans for calibrated opening of sectors, beyond the ones that are already operational given their essential categorisation:
1. In the first phase, CII has recommended that manufacturing, e-commerce and construction may be permitted to operate partially, about 25 percent initially.
2. In phase 2, the CII has recommended that all other sectors could be restarted.The sectors could be opened first partially, about 25 percent, then 50 percent and 100 percent at a later stage.
The CII has proposed following five aspects to be considered while opening up the economy:
Workplace Safety: The CII has prepared a set of guidelines on how the workplaces should function post lockdown, while adhering to the social distancing norms, maintaining proper hygiene, conducting screening and other measures to ensure employee safety.
Logistics issues: The CII has recommended allowing seamless movement of material across zones or else there may be problems in the supply chain in various parts of the country.
Re-starting industry in phases: The CII has recommended the government to design an official dashboard to monitor Covid 19 infection curves in various areas. The re-starting of sector across cities should be based on the dashboard.
Getting Back the Migrant Work Force: The CII has recommended bringing migrant labourers back to their workplaces with great compassion, care and comfort, as they may be unwilling to come back and participate in the economy unless they are provided with better living conditions and health care benefits.
Institutional Mechanism for Effective Coordination on Real-Time Basis: The CII has recommended setting up of institutional mechanisms that will help a coordinated approach for effective implementation. The industry body has recommended setting up of an empowered group of ministers at the central level to plan, review and address all implementation challenges.
Prioritisation of Industrial Sectors before restarting economy
According to the Confederation of Indian Industry (CII), the economy needs to be restarted in phases and sectors should be prioritised before restarting the economy post the lockdown.
CII’s four key indicators for prioritisation of sectors for restart:
1. Industries that are part of or support the essential goods and services ecosystem.
2. Protection of jobs and livelihood of Industrial labour or blue collared jobs.
3. Protection of export markets and customers.
4. Industrial operations that will help manage imports to a minimum based on essential requirements for further production and export.
The economy needs to be restarted in phases. CII recommends a distribution of various sectors to be restarted accordingly.
CII suggests stage-wise opening of prioritised sectors:
Stage I: Firms covering all four above mentioned indicators can be allowed to open such as Pharmaceuticals, apparels and textiles, food processing and minerals and metals.
Stage II: In this stage, other sectors including e-commerce including food and groceries delivery, agri market operations automobiles and chemicals especially those used for sanitation and other healthcare purposes and those that support pharmaceuticals and other essential sectors can be allowed to function after a gap of 1-2 weeks after the first stage.
Stage III: All the remaining sectors could be opened after 1-2 weeks after the second stage. The CII recommended strong social distancing guidelines in all stages starting from 25 percent labour participation to 50 percent participation in flexible shifts.
The Medium and Small Scale Enterprises (MSMEs) have been severely impacted by the nationwide lockdown and have already sought help from the government.
According to Director General of CII, Chandrajit Banerjee, Director General, the MSMEs with limited resources do not have the capacity to withstand massive shocks such as COVID 19 pandemic. Many MSMEs play an important role in larger supply chains. The health of these MSMEs have a large impact on the entire supply chain including the large corporates.