The State government issued a G.O. on Friday night facilitating the delivery of financial incentives to the lockdown-hit industries, especially Micro, Small and Medium Enterprises (MSMEs). The major component of this stimulus package are pending incentives amounting to ₹904.89 crore payable to 11,238 MSME manufacturing and allied units. These payments will be made in two months.
The other significant measures are waiver of fixed/demand charges (electricity) against Contracted Maximum Demand (CMD) for three months (April-June), provision of working capital loans (₹2 lakh to ₹10 lakh at 6% – 8% interest rate repayable in three years including the moratorium period of six months) and a mandate to all government entities to procure at least 25% of their annual requirement of goods and services from the eligible Micro and Small Enterprises (MSEs) comprising a sub-target of 4% from Scheduled Castes/ Scheduled Tribes-owned MSEs and another 3% from women-owned MSEs.
For large and mega units, fixed /demand charges (electricity) against the CMD are being deferred for three months (April-June) without interest or penal charges.
It was stated in the G.O RT. No.103 dated May 15 that the MSMEs have been contributing to approximately 8% of the national GDP, 45% of manufacturing output and 40% of exports.
The MSME sector in Andhra Pradesh manufactures a variety of products with a high concentration of MSEs in food, mineral, building materials, drugs and pharmaceuticals, fabricated materials and trading and service sectors.
The lockdown that was imposed to arrest the spread of Coronavirus has severely impacted the viability of their operations, hence the need for bailing them out of the crisis by releasing the incentives that are pending for several years and taking other measures that would prop up the businesses.
It was observed that many MSMEs became sick as the incentives were held up for a long time and they struggled to raise working capital due to the financial constraints that bogged them down from the beginning.