The Modi government should provide temporary fiscal support towards payments of salary for employees in the MSME sector and/or exempt employers’ contribution to provident fund and Employees’ State Insurance for the current fiscal year, industry body FICCI’s latest round of Business Confidence Survey said on Monday. Responses from around 180 companies with a turnover ranging from Rs 1 crore to Rs 60,000 crore across sectors in the survey also asked the government for ensuring timely refunds of unadjusted taxes and levies to lessen the impact on working capital constraints on small businesses amid Covid. Respondents also asked for the adoption of end-to-end paperless transactions to speed up refunds on an operational level.
Even as businesses acknowledged the policy support extended by the Reserve Bank of India on May 5, 2021, including financial support to MSMEs, multiple problems on the working of the financial system were stressed for urgent attention. A significant chunk of respondents said that they were unable to avail credit from banks as they have become excessively risk-averse. “The entire process for approval of loans has become extremely time consuming which severely dampens business prospects,” the survey noted. The survey participants also urged banks to enhance lending at a reasonable rate to the industry. “It is essential that credit is provided to distressed segments of the industry, as well as to those segments which have adequate collateral or have great potential to generate more cash flows as the economy moves towards normalization,” respondents said.
Businesses also sought continuation of liquidity support and credit enhancement measures to MSMEs from last year. Moreover, they asked for targeted fiscal support in the form of tax waiver and financial assistance to sectors that were previously kept out of the stimulus package but were deeply impacted by it including travel, tourism, hotels & hospitality, and civil aviation.
Overall, the business confidence index in the current round of the survey had declined to 51.5 after reporting a decadal high value of 74.2 in the previous round. “Worsening in current conditions as well as muted expectations about the near-term prospects on the back of a sweeping second wave of coronavirus infections pulled down the overall index value,” the survey said. The quantum of respondents citing weak demand as a constraining factor jumped to 70 per cent from 56 per cent respondents in the previous round.