Thread by @shyamsek

Bringing #MSMEs back must be our top priority. It's not going to be easy. But, @PMOIndia @narendramodi must explore ways of recapitalizing them thro' multiple options. The entrepreneurial spirit must be maintained & sensible risktaking enabled. This thread is on how to do it.1/n

Firstly, the problem is simple to understand. #MSMEs have run out of capital. Were running low even pre covid. But, #Covid_19 depleted them severely. To comeback, they need fresh, start up capital. Else, restarting is very tough. Here, we see only one saviour -Govt. @PMOIndia.2/n

When we say #MSMEs can only be helped by Govt, let us first set ground rules. The idea is to recapitalise them swiftly so they work doubly hard to return to good shape, return monies & emerge stronger. Subsidies are not sought as freebies Giveaways are temporary & returnable.3/n

Most #MSMEs in dire trouble have little or no capital left, no fresh collateral in the company to offer & no way of paying salaries. The Govt must find a way to give them money quickly. The only way this can be done is to rely on the entrepreneur's personal creditworthiness.4/n

Most entrepreneurs have access to only one asset class now to help establish their creditworthiness. It is their family's sole liquid asset. Families still keep it away from bankers, often out of purview of even their tax returns. Allow #MSMEs access to cheap loans vs Gold. 5/n

Allow banks lend money against #gold to #MSMEs in respecting of their internal /external credit rating, Give them 80% against value of gold. Fix a flat interest rate of 7% only for #MSME gold loans. Allow #MSMEs to borrow upto 75% of their audited networth on March 31,3019. 6/n

Entrepreneurs must be indemnified from revealing source of gold offered as collateral towards #MSME gold loans. Give priority sector lending status to this category. Set speedy disbursal rules. Payout loan within 100 hours of seeking loan with duly assayed gold collateral. 7/n

Allow #MSMEs to choose the tenure of repayment with ample flexibility. Let repayment options be multiple - they can choose from monthly , quarterly, half yearly, annual or one time bullet repayments. @PMOIndia @Narendramodi
8/n

While asking entrepreneurs to take more risks, govt must signal its willingness to share their burden. This must be done in ways to encourage job protection. This can be done by govt foregoing its income from #MSMEs for a period & sharing specific costs. Do it for one year. 9/n

GST is a big point of stress for #MSMEs. Give them a one-year, interest free GST loan. Let #MSMEs collect the money & file returns. But remittance maybe permitted in monthly instalments starting from the 13 th month and ending on the 24 th month. @PMOIndia @narendramodi 10/n

Costs of #MSMEs can be borne for a year under two heads- ESIC and PF employer costs of #MSMEs must be borne by the govt for a year. This reduces costs for a year & compensates #MSMEs in part for salaries paid during lockdown. It ensures the employee gets benefited too. 11/n

Giving #MSMEs support is not an option. It's a necessity. But, they must still be helped in ways that release capital, recapitalise & revive biz. They must emerge well-capitalized & creditworthy over a period of 3 years. Govt must enable that quickly. @PMOIndia @narendramodi 12/n