The entire World is presently in the grip of Covid-19 virus. It has been declared a pandemic, consequently fear bordering on paranoia has taken grip across the World. Consequently almost the entire World is in a state of Lockdown. The fear in the minds of people is so much that If you happen to venture out to purchase some daily essentials and happen to come across someone in the street, you are treated as if you are the manifestation of a walking virus in human form. However, historically looking back, the present condition is nowhere near the level of devastation that was inflicted by far more lethal epidemics in the past like the Spanish Flu or many such attacks by the “militant” virus community. Eventually in a few months time this Covid-19 threat would have been conquered successfully by our brilliant Scientists and eventually humankind will cope to co-exist as we have done with the mother of this present iteration, “Influenza”.

What is more of a concern is not the medical pandemic of Covid-19, but the economic pandemic that is going to spell a much more vicious and lethal impact. Talking about India, it would be a huge challenge for the Government to bring the economy back on track and once again set it back in motion. Almost 40% of the current economy is supported by the MSME Sector. In fact most of the migrant workers who have fled from Cities are in some form employed by the MSME Sector. Even considering the fact that all goes well and we re-open for business post 15 April 2020, it is going to be a very tough challenge to get things going before the beginning of July/August 2020. And God forbid, if the present state of limbo were to extend to say May 20 / June 20 it will most definitely be catastrophic.

As a MSME Business Owner, I certainly do not want the situation to come to a point where I have to “lay-off” people or be in no position to continue to pay salaries. However, so far apart from Office Orders there has been no concrete plans for recovery announced by the Government. The Government has only stipulated by way of series of office orders that “No employee” should be retrenched” or that “full Wages” need to be paid etc. But HOW? This is the big question that needs to be addressed. And the solution has to be given by the Government. Most of the Business owners in the MSME have very limited or absolutely no “cash reserve” unlike its more affluent and well established counterparts. Under the current circumstances, It is feared that MSMEs—the key pillar of the Indian economy and the second largest provider of jobs—will no longer enjoy the same status post COVID-19 once the Lockdown ends. The pandemic has posed an existential crisis for the MSMEs. What choice does a business owner have?

The Reserve Bank of India, in a recent announcement of three-month moratorium on payment of instalments of term loan outstanding, deferring of interest rate on working capital and also not considering the deferment for NPA is expected to benefit a lot of MSME borrowers. The RBI’s measures are estimated to inject Rs 374 crore liquidity in the economy. This has come in as a relief but there is a lot more that needs to be done. What the Government has to consider is that the MSME sector contributes significantly towards the GDP. If this sector were to be crippled the entire economy will indeed slip back by 21 years as announced by our Honourable Prime Minister.

It is time that the government announces and implements schemes to provide specific relief measures to the small businesses, which are amongst the worst hit. The need to working capital and cash flow lending both without any need for collateral, is more pronounced during these times than ever before. We completely understand that India unlike the other more affluent Countries may not be able to support the Industry financially by announcing direct aid packages. However, what can be very easily done is to provide “working Capital Loans” at a marginal Interest with a moratorium of 6 months to 12 months.

It is time that the Government and intelligentsia domain experts and stakeholders from banking, financial services, think tanks, policymakers, industry, chartered accountants, consultants and economists get down to the task of charting out a specific plan to resuscitate the MSME, rather than allow it to die of asphyxiation. Like the dilemma of the Prince of Denmark in Shakespeare’s play, the question is not if the Lockdown ends or gets extended, the support and firm hand-holding by the Government would be a mandatory requirement to pull the economy out of this quagmire.