Former finance minister P Chidambaram on Wednesday urged Prime Minister Narendra Modi to provide Rs 1 lakh crore wage protection assistance to 6.3 crore Micro, Small and Medium Enterprises (MSMEs) to help them pay wages and salaries to 110 million people engaged in these MSMEs for the month of April.
And for non-MSMEs, he said the government should announce a “Paycheque Protection Programme” on the lines of the steps taken by the United States.
“This is not a legislation but a financial assistance package,” Chidambaram said, addressing the press through video-conferencing.
“It is bewildering that there has been absolutely no financial package or assistance announced for businesses since the onset of Covid-19. The government may have the luxury of time but the MSMEs do not. They need to know right away whether they will be helped to stay afloat and thereby pay salaries and wages to those dependent on these businesses,” he said.
“Tomorrow is the last working day of the month. More than 12 crore people of India are waiting with bated breath. They want to know if they will be paid their salaries and wages for the month of April. There is palpable tension and rising uncertainty among the working people of India and their families,” Chidambaram said.
According to the annual report of the MSME ministry, the senior Congress leader said 11 crore people are engaged in 6.3 crore MSMEs and most of them would not have worked a single day in the month of April because the entire country was in a lockdown imposed to contain the coronavirus pandemic.
“How will these people feed themselves and their families without an income? These 11 crore people’s livelihoods are in danger now because most of the employers are unable to pay wages and salaries. The businesses have had no sales this month and their payments to their vendors are also stuck, leaving the vendors also in distress,” he said.
“Large swathes of the private sector are faced with what economists call an extreme liquidity shock. Furthermore, these businesses are also unsure about their future. They do not know whether they can continue their businesses or will be forced to shut down permanently. The time to make bold decisions to save the MSMEs is now. If businesses do not see hope, they will decide to close,” he added.
The government has to step in today to protect 110 million Indians and give hope to 6.3 crore MSMEs, Chidambaram said, adding the Congress has submitted a proposal with specific, well thought out and concrete suggestions to help them.
“We urge the Prime Minister to look at that proposal and immediately announce Rs 1 lakh crore wage protection assistance to MSMEs to help them pay wages and salaries for the month of April, and also Rs 1 lakh crore credit guarantee fund for MSMEs that will help them to go to the banks and borrow money,” he said.
Elaborating on the ‘Paycheque Protection Programme’, the former finance minister said according to the income-tax department, there are roughly 10 million people with a salary income of less than Rs 3,50,000 a year or Rs 30,000 a month.
“Assuming an average salary of Rs 15,000 a month for these 1 crore people, the total cost comes to Rs 15,000 crore for the month of April. This is not a large sum to protect the livelihoods of 10 million people who have filed tax returns and paid taxes in the past, and can be easily found. The government must announce a Paycheque Protection Program right away to protect the salaries of these 1 crore employees.”
The Congress also suggested waiver of employers’ contributions to the employees provident fund (EPF) and employees state insurance (ESI), on a temporary basis, for the next three months, he said, adding this will assist in reducing the payroll costs of employers and retaining the workforce.
“Time is of the essence. In the absence of a clear signal of assistance from the government during these extremely difficult times, the private sector will be forced to resort to large scale retrenchments and layoffs which will devastate livelihoods of hundreds of millions of people,” Chidambaram said.
“We urge the Prime Minister to step in urgently and announce an assistance package to protect the wages and salaries and pay cheques that are due in the next few days,” he added.
