Stimulus Needed by Middle Classes and MSME’s
The welfare package announced by the FM – Nirmala Sitharaman is a welcome step, provided the benefits can reach the intended beneficiaries in full and in quick time. Some of the benefits of the cash transfers might get lost due to exorbitant prices of the essential supplies if the disruption in the supply side are not addressed quickly. Ideally these measures should have been announced at the same time when the lockdown was announced. The worst affected in this lockdown are the labourers and employees of the unorganized sector who have started the journey back home in perilous conditions. These urban migrant labourers probably do not figure in any of the government database and are unlikely to receive the government largesse. These people survive on a day to day or month to month basis and they had no way to stay put without any assurance coming from the government in time. How many of them will reach their villages safely and how many will perish may never come to light.
Most of the healthcare industry falls in the MSME segment and is currently in a state of lockdown. Most of the OPD’s are shut, elective surgeries are put off and contrary to the common belief the revenue cycle is not even 20% of the normal. The salaries, electricity bills and EMI’s still have to be paid. The government has still not announced any kind of package for the MSME segment which forms a very big chunk of Indian economy. Big firms might be able to borrow more and service the debt but the MSME segment has neither the access to increase in working capital requirements nor the capacity to serve this increased debt. What is expected of the government is to immediately announce a package for the middle and the lower middle classes of its citizens. All Home Loan EMI’s and Credit Card bills should be stopped for a 3 month period. In case of Home Loans the tenure of the loan can be increased and the interest burden of this 3 month period should be borne by the government. Similarly the interest burden of the credit card bills for the period April – June should be borne by the government and the limits of the credit cards should be increased by 30% for all credit card holders with limits upto 2 lacs. Any account holder whose deposit is under 2 lacs of Rupees should be given an interest free loan of Rs. 30,000 for a period of 3 years. The EMI for this loan can start from July onwards. Assuming that there are 80 crore Indians whose bank accounts have a deposit of less than 2 lacs, the annual burden on the government will Rs. 60000 crores per year for the next 3 years.
To support the MSME segment the government must postpone the EMI payment for the loans for a 3 month period and increase the tenure of the loan. The interest burden for this 3 month period could be added to the loan amount if the government does not have the funds to absorb it. All bills like electricity and water bills for the 3 month period Mar-May should be distributed equally over the next 12 months without any levy in the form of interest or penalty. Currently the focus should be on making sure about the survival of the MSME segment and not on boosting the demand. If jobs can be saved during this 21 day lockdown and the disruptions of the next 2 months, then the demand will take care of itself.
Healthcare industry is staring at a dark future. The lives of more than 80 crore Indians have been disrupted and once the lockdown opens, the people will not have the money to take treatment from the private sector. The load on the government sector is unbearable at the present and they will be overwhelmed by the additional load once they open their OPD services after the lockdown period. The Healthcare entrepreneurs will have to think out of box solutions to these problems. Surgeries will have to be clubbed together and significant discounts would have to be given to the patients to bring them back to the hospitals.
We are going to survive this challenge but will be poorer as a nation and as individuals. The debate on how did this pandemic started and who has benefited from it can continue till the cows come home. Still 19 days of lockdown to go. This is the time to ponder as to what we have made of our lives which are now so much dependent on outward supplies costing money. Spending time with your family, listening to Rafi, Lata and working out at home are still free activities and should be enjoyed to the maximum. So keep those spirits high even if the spirits are missing.