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Govt Must Provide Means for Micro and Small Businesses to Survive COVID Lockdown and Likely Economic Recession Thereafter

Almost all the people of Manipur except those in the higher echelons of society are reeling under the onslaught of Covid-19 lockdown since the 24th March, 2020. While the focus of attention has been on distribution of rice under the National Food Security Act, quarantining of high-risk people and medical treatment of a few confirmed cases, nothing is heard of the relief from the government for small businesses in the state. Jairam Ramesh, former Union Minister and Member of Parliament in the Rajya Sabha has proposed creation of a corpus of one lakh crore rupees to provide assistance to Micro, Small and Medium enterprises in the country. Neither the Union nor the State Government of Manipur has so far announced any relief package for MSME sector of business.

In the context of backward state of Manipur, MSME business are the real wealth creators, if we are to use the overriding theme of Union Government’s Economic Survey of 2019-20. The entire Volume-I of that Survey dwells on the importance of entrepreneurship, pro-business policies and wealth creation by the private sector as the foundation to achieve the goal of $5 trillion economy for the country by 2024-25. Ironically, the Finance Ministry of the Union Government, which authored the Economic Survey is completely silent on any relief package during the ongoing closure of MSME business across the whole country.

In the absence of medium and large business, micro and small business in manufacturing and service sectors are the backbone of the economy of Manipur after the traditional agriculture. Almost all of them are in the private sector as the erstwhile state enterprises like Manipur Spinning Mill, Manipur Electronics Corporation, Manipur Cement Corporation, Manipur Plantation Crops Corporation, Manipur Cycle Corporation, etc. became sick and unviable, and subsequently liquidated. A number of youths of Manipur having received good education within and outside the state plunged into business ventures as the traditional employment in government sector has been banned since the early 90s.

While running private schools has proved to be, by and large, successful and profitable, a number of doctors and non-doctors have too created a fairly good health infrastructure to tap into the emerging demand for quality healthcare. These two sectors, besides supplementing government’s efforts, have really contributed their share in improving quality of services in their respective area and generated extra employment, which otherwise would not have been available. Trading has been in the hands of Marwaris, Punjabis, Rajasthanis, and other non-local domiciles living in Manipur for decades. By and large, Manipuris have been farmers of small land holdings with small yields. Those who get educated were traditionally mostly employed as teachers of schools and colleges. It was inconceivable to see Manipuris competing with the well-established business community who have been controlling both wholesale and retail trades.

Slowly and surely, local people, especially well-educated youths started the business in trade in automobiles, construction materials, electronic gadgets, etc. Some others started ventures in manufacturing in small ways, where market is readily available.

Now, all such businesses –schools, hospitals, shops & stores, manufacturers are facing unprecedented difficulties as they are shut down due to lockdown. They are unable to pay wages/salaries of regular employees ranging from janitors to managers. Repayment of term loans and working capital loans from banks is another challenge. Repayment of term loans are being deferred for three months-March, April and May- without waiving interest on the loan. This means interest is payable on the deferred loan and defaulted interest. However, there is no policy on repayment of working capital. Due to likely recession of the economy now, demand is going to be much lower putting the businesses at great risk of closure and default of repayment. Considering the importance of MSME sector in the economy, it is suggested that the government pays unemployment allowance to such employees of the MSME sector covering self-employed weavers and crafts persons and regular employees of firms registered under GST for at least three months, which would help both the employers and employees.

Weavers are an important contributor to the economy of Manipur. Now, supply chain of handloom weaving has been broken by the lockdown jeopardizing the livelihood of thousands of weavers all over the state. Importance of weavers in sustaining several families do not need over emphasis. It is, indeed, necessary to ensure availability of yarns to the weavers at their doorsteps, and buyback the finished products by the state agency-Manipur Handloom and Handicrafts Development Corporation. Farmers-fish, poultry, dairy, horticulture and agriculture are also in need of support from the government departments. Supply of feeds for poultry and fish has been disrupted. Each of the farmers, organized as Farmer Producer Companies need to be assisted by the concerned departments in both production and marketing so as to sustain the business. Dairy farmers are now in distress for lack of market. During the lockdown, official machinery needs to be activated to bridge the gaps and address the problems. Concerned Ministers should be sensitive to the woes of the people at large and realize the action required. It is the question of not only being humane, but also of taking responsibility at this hour of need. A stich in time saves nine.

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