A high level meeting chaired by the Honorable CM YS Jagan Mohan Reddy , attended by the Minister for IT, Commerce and Information Technology, Gowtham Reddy , Chief Secretary Nilam Sawhney and all other top officials from the Industries and Commmerce departments resulted in the formulation of 3 key policy decisions which do the job of pumping life back into the Micro, Small and Medium Enterprises in the state of Andhra Pradesh apart from providing relief and support to other industries on Thursday ( 30th April) at the CM camp office in Tadepalli.
During a review meeting on the MSME sector held here on Thursday, Chief Minister YS Jagan Mohan Reddy directed the officials to develop an action plan to boost the MSMEs which are in the crippled due to Covid-19. In regard to this, the Chief Minister decided to clear the pending grants to the MSMEs from 2014-15. During TDP rule from 2014-15 to 2018-19, almost Rs 828 crores were left unpaid. With this, the total dues which are about Rs 905 crores are going to be cleared in two spells, one in May and the other in June.
Speaking on the initiative Minister for Industries Mr.Meekapati Gowtham Reddy said ,’ This will help the MSMEs cope with the economic impact of Covid-19. A total of 97,400 MSMEs which employ over 9.7 lakh people to benefit from these decisions. As part of the fostering plans for MSMEs, the Chief Minister decided to waive minimum power demand charges for the months of April, May, and June. Apart from MSMEs, all the power utility bills for the remaining industrial sectors have been put back without imposing any additional charges. In addition to these, to boost up the MSME sector, the State government will allocate Rs 200 crores as investment capital by providing loans in partnership with SIDBI at a low-interest rate.”
With these decisions, over 72,531 micro enterprises, 24,252 small and 645 medium scale industries are going to be benefitted, which would eventually create employment for about 9,68,269 people.
Key Decisions and Economic Impact
– All pending Industrial Incentives to MSMEs, amounting to 904 crore rupees, out of which 827 crores are the pending bills left behind by the previous government will be cleared in 2 phases. The first half of 50% will be cleared in May while the other half will be cleared in the month of June.
How this helps
The economic impact of the spread of Covid-19 and the consequential lockdown has harmed the financial capability of a lot of MSMEs, specially Micro ard Small industries in terms of sustaining despite having to cope with the loss incurred due to the lockdown. Disbursement of pending incentives injects cash into the system, kickstarting the whole cycle and putting it into motion.
– All Fixed Charges/Minimum Demand Charges that over 97,400 MSMEs would have to pay for their electricity for the months of April/May/June will be waived off by the Government. The same will be deferred in the case of all other enterprises for a similar period.
How this helps
At a time when the those owning Micro and Small industries are struggling to make ends meet and pay employees, the Minimum Demand charges or Fixed charges that they would have to pay irrespective of whether or not they have consumed any power during the lockdown according to the norms, could have been a huge burden on the managements. The government waiving this off for a period of 3 months, extending into the time they could utilise to restart operations could be very viral in their revival.
– The CM has decided to come up with a 200 Cr Working Capital loan fund which could be extended to MSMEs as loans with minimal interest rates ranging between 2-10 lakh rupees. Authorities are working on a specific plan with relevant departments. Guidelines to be declared soon.
How this helps
A lot of Micro, Small and Medium enterprises suffer due to the exorbitant rates of interest when it comes loans procured from the informal sector. This not only gives such enterprises a much better and trusted option but also saves them a lot of money.