Does the COVID Relief Package Will Encourage For Manufacturing Plants?
COVID-19 or coronavirus pandemic has not only claimed a hundred thousand lives but has also left businesses panting for survival. Various small and medium scale industries and manufacturing plants have faced the wrath. Almost all the major developed and developing companies have faced the heat. Economies came rattling down with various governments in estimating their deficits to reach $30 trillion by 2023. The governments have infused a whopping $13 trillion to bring their respective economies to stability.
India & COVID-19
India is nowhere left behind. With over 440,000 cases since January, the lockdown imposed in the month of March in four stages has severely impacted the economy. With almost all the economic activities being stopped, the lives of millions of workers have been thrown out of track. There have been cases where small or medium scale manufacturing factory building are out for sale because the owners have been bankrupt. According to Goldman Sachs, the economic decline is estimated to be 45%. On the other hand, Moody, a global rating agency, slashed the credit ratings of India at the lowest investment grade.
India’s Fight to Revive the Economy
Like other major economies, the government of India too took some massive decisions and steps to lessen the loss caused by the economic fallout. The government of India announced a staggering $266 billion stimulus package (10% of India’s GDP) to revive the economy. This package includes both monetary and fiscal measures.
The economic package would:
- - Spur the domestic demand and consumption by putting money in people’s pocket
- - Help the ailing small and medium scale industries, cottage industries, middle-class people, and labourers in their fight against financial crises
This mega package has been appreciated and welcomed by industrial experts. They believe that it would help bring the halted machines in the manufacturing factory building back to its golden days.
COVID Relief Package and Manufacturing Plants
The relief package is not merely to revive the economy and boost the purchasing power of the common people but also includes major bold reforms in terms of 4Ls- Labour, Land, Law, and Liquidity. The bold reforms have turned out to be a cherry on the cake in gloomy times.
Whatever we consume or use are the products of the manufacturing plants. Even a needle used by a tailor is manufactured. Therefore, if a businessman wants to buy the factory for sale and wants to turn it into a needle manufacturing industry, he/she would need money. The package would boost such businessmen to chase their dreams even in the dismal situation.
Well, whether this relief package will benefit the industries and encourage manufacturing plants or not will be clear if one knows what the inclusions are. Since in economy everything is related- from purchasing power to supply and demand, let's see how the package would boost manufacturing industries--
- - ₹20 crore women having Jan Dhan accounts are to get ₹500 every month for the next 3 months. This will enable them to buy things of their needs from the market.
- - NREGA workers would be paid at ₹202 per day. Earlier it was ₹182. This will boost the purchasing power of over 13.62 crore families
- - To boost the small and medium scale manufacturing units, collateral-free lending has been increased to ₹20 lakhs from ₹10 lakhs. This would help women from Self Help Groups and consequently 6.85 crore households
- - Special refinance facilities have been provided to SIDBI, NABARD, and NHB. The amount stands at ₹50,000 crore
- - Package of ₹3 lakh crores collateral-free loans for MSMEs and businesses. Thus, any business house that wants to acquire the manufacturing factory for sale can do it easily
- - MSMEs can also expand their business and lookout to acquire a factory for sale because the government has declared the infusion of ₹50,000 crore equity infusion. It will encourage MSMEs to get listed on Stock Exchanges
- - MSME classification has been revised and to boost investment of various interest groups in manufacturing factory building, required amendments are done in the General Financial Rules
Uncertainty exists in the market because of the presence of coronavirus. However, the COVID relief package is surely going to boost the manufacturing units, investment in a manufacturing factory building, and other required infrastructure. A boost in the purchasing power of an individual would give a to the manufacturing houses for sure.