As small businesses have been the worst-hit amid the lockdown and the government has come up with relief and liquidity measures, a report by CEEW and NIPFP has suggested that a centralized digital platform should be created for MSMEs in order to identify them, provide incentives and support them as per the requirement.
The report on jobs, growth, and sustainability, released on Thursday, noted that it is difficult for Central and state governments to provide financial and in-kind relief measures to MSMEs and their workers due to lack of identification and sector-wise association of MSMEs and their employees.
“We propose the creation of a nationwide, centralized digital platform, ‘MISHRII’ – MSME Information System for Holistic and Real-time Identification, Incentives and Support’,” it said.
The platform would collect data on the size, distribution, and economic contribution of MSMEs and their workers to the national output, and seed details such as occupation, days of employment and monthly income into their Aadhaar-linked profiles.
It should be linked with the GSTN and income tax databases and the banking network for direct benefit transfer (DBT), the report said.
Further, it also suggested the framing of a vulnerability assessment framework for MSMEs to efficiently target support measures by accounting for varying levels of vulnerabilities and sectoral nuances, resulting in ineffective use of government resources.
It said that there are major differences in the exposure to risk, profitability, and ability to quickly recover from setbacks for each MSME sector.
As a case study, the Council on Energy, Environment, and Water (CEEW) developed two-dimensional metrics to compare the relative vulnerability of MSME sectors across two parameters — economic importance and business risk.
According to the metrics, the most vulnerable sectors are textile manufacturing, chemical products, and metal products.
Suggesting the government to increase the capacity of the ‘SAMADHAAN’ system to expeditiously clear government dues to MSMEs, the report said that the government should prioritize clearing the receivables of all MSMEs who are long term suppliers with a good track record on a provisional basis.
This will reduce the number of cases that need to be addressed within the 45-day timeline, it said.
The government also needs to immediately issue a directive to the states to expand the capacity of the Micro and Small Enterprise Facilitation Councils (MSEFC) so that the resolution of the casescan be expedited.