Government-gauranteed $40 billion loans is too little and may not be enough to save the pandemic hit companies
Published On: Friday, July 10, 2020 | By: Team KnowMyStock
After months of lockdown, India reopened for business in June but for thousands of small entrepreneurs, the blow has been devastating. Businesses from textiles to sports goods and furniture are shuttered or working at a bare minimum. Govt's programme to help small businesses back on their feet through $40 billion of government-guaranteed loans is too little and may not be enough to save the many companies that form the backbone of India's economy, nearly three dozen entrepreneurs Reuters spoke to across the country said. Some said their business was so hamstrung by the pandemic that taking on new debt made little sense. They would rather the government had helped them by cutting the goods and service tax or waive off the interest on loans.
Others said that despite Govt's promise to open up the credit lines, it was not easy convincing bankers to lend because of the death throes their businesses were in.
Small businesses that account for nearly one-quarter of India's $2.9 trillion economy and employ more than 500 million workers are the worst affected by the pandemic.
Nearly 35% of the 650 million small businesses across the country could shut down soon in the absence of government support, the Consortium of Indian Associations said in a letter to PM's office.
Bankers said there is government pressure to dole out loans, but businesses are not coming forward as demand remains tepid. Businesses say that the lenders are either asking for increased paperwork or the ones in desperate needs are being deemed ineligible.
Tags: small entrepreneurs lockdown
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