Many businessmen hamstrung by COVID-19 wary of new debt, want GST slashed
India reopened for business in June after two months of lockdown, but for thousands of small entrepreneurs in the town of Meerut, near Delhi, the blow has been devastating.
Businesses from textiles to sports goods and furniture are shuttered or working at a bare minimum, and cows roam streets that would be normally packed with workers and vehicles.
Prime Minister Narendra Modi’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. Rather, the government could help them by cutting the goods and services tax (GST) or waive the interest on loans, they said.
‘Can’t convince bankers’
Others said that despite Mr. Modi’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. Ashok, whose near ₹10 million annual turnover company based in Meerut made steel furniture for hotels and schools, said he had fired eight of his 10 workers and was thinking of shutting down operations.
“It would be better for me to close the unit than to run from pillar to post to get a loan,” said Mr. Ashok, who did not want to give his full name. He said his banker told him his creditworthiness is low as his business is struggling.
Bankers said there is government pressure to dole out loans, but businesses are not coming forward as demand remains tepid.
Lenders have till now paid out ₹561 billion, barely 19% of the sum earmarked.
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