‘Will support small businesses and industry at large’

The Tribune Interview: Anurag Thakur, Union MoS for Finance

The government is working on a well-demarcated road map and will provide adequate liquidity for sections that need it most, says Union Minister of State for Finance Anurag Thakur. The government has taken measures to ensure businesses stay afloat amid the pandemic and has initiated landmark structural reforms to accelerate growth post Covid-19. Excerpts from an email interview with The Tribune:

You have projected that the stimulus package is worth 10% of the GDP. But in terms of governmental expenditure does it amount to more than 2% of the GDP? One newspaper has put the fiscal relief at 1.1% of the GDP.

We are working with decisiveness on a well-demarcated road map for building ‘Aatmanirbhar Bharat’ through the infusion of Rs 20 lakh crore to boost economic activity post Covid-19. In the days and weeks ahead, you will see swift implementation of these measures. In fact, successful implementation of big-ticket reforms is the hallmark of the Modi government. The arithmetic has been transparently clarified. The relief packages by other countries are on similar lines. Money will continue to go to intended beneficiaries.

The stimulus packages have been dubbed as a mega loan mela by critics. Instead of creating demand in the economy, won’t the liquidity injection create more debtors and NPAs?

Our measures provide timely and adequate liquidity to those sections that need it most. This liquidity infusion will help small and medium units across the country to pay wages, purchase raw material and keep afloat, particularly the MSME sector that provides employment to 120 million people and contributes about 45% to overall exports. Most of these MSMEs could not operate because of the lockdown. After due consultations with stakeholders, we took this decision to ensure availability of liquidity for businesses.

Goldman Sachs is predicting that our economy will contract at 5% of the GDP in 2021. The NCAER had painted a scary picture of 12.5% contraction without a stimulus package. Now with the stimulus package, what does the Ministry of Finance foresee?

Agencies themselves have revised their figures numerous times in the past two months. It’s too early to predict. We are only in the second month of the financial year 2020-21. We have taken measures to ensure businesses stay afloat during the pandemic and undertaken historic structural reforms to accelerate growth post-Covid.

While a section of agricultural economists like Gulati has welcomed the agri stimulus, some others fear the reform measures might dismantle the MSP regime. Is the fear unfounded?

Our ‘ann daata’, our farmers, have been freed from the clutches of the archaic Essential Commodities Act and the APMC Act. This gives them complete access to better markets and competitive pricing to sell their produce. Further, support from the Centre in the form of Rs 1 lakh crore Agricultural Infrastructure Fund will smoothen the farm-to-market connect.

Farmers of Punjab and Haryana aren’t really happy. They are asking for direct cash transfer.

We have spent Rs 75,000 crore to purchase their produce under the MSP. A sum of Rs 18,000 crore was transferred via DBT to 9 crore farmers across the country. They have been provided a three-month moratorium on loan amounting to Rs 4.25 lakh crore and an additional Rs 86,000 crore has been disbursed by banks in the past two months. Further, Rs 2 lakh crore loan will be made available to 2.5 crore new Kisan Credit Card holders.

Even after all packages, our migrant labour force is still on the move, walking home. When can we expect their livelihood getting restored?

The Centre has released upfront Rs 11,000 crore to states as part of the State Disaster Response Fund and allowed them to utilise these funds for the poor, vulnerable and guest workers. We have made a historic allocation of over Rs 1 lakh crore for MGNREGS which will generate 300 crore man days of work. It is the primary responsibility of the host state and the home state to take care of guest workers.

What measures should the host states take to bring down the anxiety level among migrant workers?

States must initiate a dialogue with industrial units and workers, re-build their confidence and facilitate those who wish to stay and return to work. For those desirous of repatriation to their home state, the host state must ensure transport logistics.

Why are the states complaining about lack of Central funds — GST and other accruals?

There has been a generous support to states. Over Rs 46,000 crore (April) was given to states as devolution of taxes, over Rs 12,000 crore was given as revenue deficit grants, despite Centre’s stressed resources. The Ministry of Health released over Rs 4,000 crore for direct anti-Covid relief measures, apart from Rs 550 crore for testing labs and kits. Also, free foodgrain under the Garib Kalyan Yojana has already been provided.

The primary concerns of the industry, especially MSMEs, are salaries to workers and bank interest during the lockdown period. Will the government consider direct cash relief for salaries and interest deferment?

We relaxed EPFO rules to enable easier access to money for employees to withdraw 75% credit equivalent to three months’ salary. The Centre will pay EPF contribution of both the employee and employer (12%+12%) for three months. We have provided guarantee and collateral-free fund of Rs 3 lakh crore for the MSMEs.

The industry feels none of the announcements will help MSMEs immediately, except clearing their pending payments in 45 days. Is anything more in the pipeline for this stressed sector?

Firstly, pending payment of MSMEs will be cleared in 45 days. The new definition of the MSME will act as a catalyst for growth and expansion. Despite the lockdown, I-T refunds have been released to over 15 lakh assessees. The reduced 25% TDS and TCS rates for non-salaried sections will provide additional Rs 25,000-crore liquidity. The compliance burden has been further reduced and insolvency proceedings limit raised from Rs 1 lakh to Rs 1 crore.

Banks are wary of giving collateral-free loans to the MSMEs. Do you plan devising a mechanism to monitor the progress of loan applications and approvals?

The Finance Ministry will ensure regular assessment so that our announcements, especially those pertaining to the banking sector, are implemented in a time-bound manner. We are here to support small businesses and the industry at large.

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