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Budget fails to resolve NPA Issue: Dr Visswas Paanse

Thursday, July 11, 2019

The budget presented by Finance Minister, Nirmala Sitharaman has loudly talked about Prime Minister Narendra Modi’s dream of taking Indian economy to US dollar 5 trillion by 2024-25, it lacks lust with regards to any corrective measures for the revival of Micro, Small and Medium Enterprises (MSME) and Non Performing Assets (NPA), said Dr Visswas Paanse, Ex-Banker and NPA turnaround Specialist.

At the same time, the Budget has not announced any direct incentives for the SME sector which is under tremendous pressure from last three years due to various banking regulations and insolvency process, Paanse added. Likewise, the burning issue of NPA which has crippled the Indian banking systems as well as corporate houses remained unsolved. Surprisingly, almost Rs. 7.30 lakh crore has been stuck up in the NPA from last couple of years and running concerns like Jet Airways have become sick (turned into NPA) but the Finance Ministry has not come out with any solution.

While the Government is talking about Job Creation & Employment Generation but spot on prominence should be set for rehabilitation and revival of Sick MSME’s, which will in turn, lead to re-birth of existing traumatized employment and narrow down the economy replacement cost in-turn boosting growth.

Serious steps needs to be initiated by the Government as the present average unemployment rate is 8% approx. that is highest in last 45 years.

There is a pressing need for formation of Indigenous/ internal Rehabilitation Fund for Stressed MSME/ SME. The Public sector Banks should make a provision for 20% funds of the amount written off by the banks as a resort to revive the NPA account under NCLT. Welcoming few new schemes, Paanse said, “ For the MSME sector, Rs. 350 crores has been allocated for 2019-20 under the Interest Subvention Scheme, for two% interest subvention for all GST registered MSME’s on fresh or incremental loans”, is a good move.

On the other hand, the Finance Ministry also said that the GoIwill create a payment platform for MSMEs to enable filing of bills and payment. This will help eliminate delays in payment and give a boost to investment in MSMEs, Paanse pointed out. Though the reduction in the base rate for companies with less than Rs 400 crores has been reduced to 25% from 30%, the Budget has not looked at the SME which contributes almost 60% of total income to the Indian economy by way of both revenues and employment generation, Dr. Paanse pointed out.

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