What about small businesses during the COVID-19 crisis?
Real Estate

What about small businesses during the COVID-19 crisis?

Small businesses which are part of the supply chain of larger companies need to have a dialogue with their buyers which are large corporations whether they can be provided safety protocol gear and facilities to adhere to production schedules. Fertilisers, chemicals, pharmaceuticals, municipal corporations, defence, etc, are already working by observing safety protocols. Industrial estates and complexes can also similarly make it mandatory for their zones to have an understanding on mandatory conditions to be followed. Here, the penalty would be that the discovery of a single infected person could bring the entire complex under a lockdown by the authorities. Hence, only very responsible companies which are part of such complexes can take this call.

Small businesses are being constantly reminded that they should not retrench employees but they do not have any means of keeping afloat. The deferment of EMIs  for three months is a definite good step but the offer of payment of Provident Fund dues by the government has riders which exclude several small businesses. Loans to small businesses are not provided without security though the government is intending that banks would act otherwise. Extending greater loans for keeping small businesses afloat may also seep the enterprises into debt as the model of their businesses may not stand the test of time with the revised decline in demand post-COVID-19 scenario. Entrepreneurs need to examine the breakeven point under revised circumstances and assume the responsibility of further debt.

Relief must include ease in compliance of GST, leniency in NPA norms for banks, tax filing firms to be provided with an additional 50 per cent working capital limit on their existing limits without any additional security, etc. Demand for all non-essential items will take a beating, and therefore, several companies need to essentially decide whether they can sustain the deficit and whether their business can spring right back soon after or would the demand just collapse or evaporate. A relief package for sustaining small businesses is in the works and must help address their liquidity issues on an urgent basis without too much of red tape. There is also an urgent need to refund taxes and incentives to exporters must be released.

Also read:
How to restart the economy during COVID-19 
Is the government doing enough to handle the crisis? 
Construction and Infrastructure can kickstart the economic engines
How will the future Post-COVID19 unfold? 

About the Author: A chartered account by qualification, Pratap Padode is the founder of ASAPP Info Global Group and his passion for infrastructure over last 20 years is reflected in the innovative thought leadership through 10 specialised journals, conferences and awards organised in the fields of construction, infrastructure and engineering. CONSTRUCTION WORLD was the first journal that he began with over 20 years ago. Further, he is the Founder & Executive Director of FIRST (Foundation of Infrastructure Research Studies Training ), which was set up in 2003, that brings out research reports and newsletters on various infrastructure segments. He received the CIDC Vishwakarma Award 2010 for his research in the construction sector. Since early 2014, he has been promoting the cause of smart cities in India and is now Founder & Executive Director of the Smart Cities Council India.

Small businesses which are part of the supply chain of larger companies need to have a dialogue with their buyers which are large corporations whether they can be provided safety protocol gear and facilities to adhere to production schedules. Fertilisers, chemicals, pharmaceuticals, municipal corporations, defence, etc, are already working by observing safety protocols. Industrial estates and complexes can also similarly make it mandatory for their zones to have an understanding on mandatory conditions to be followed. Here, the penalty would be that the discovery of a single infected person could bring the entire complex under a lockdown by the authorities. Hence, only very responsible companies which are part of such complexes can take this call. Small businesses are being constantly reminded that they should not retrench employees but they do not have any means of keeping afloat. The deferment of EMIs  for three months is a definite good step but the offer of payment of Provident Fund dues by the government has riders which exclude several small businesses. Loans to small businesses are not provided without security though the government is intending that banks would act otherwise. Extending greater loans for keeping small businesses afloat may also seep the enterprises into debt as the model of their businesses may not stand the test of time with the revised decline in demand post-COVID-19 scenario. Entrepreneurs need to examine the breakeven point under revised circumstances and assume the responsibility of further debt. Relief must include ease in compliance of GST, leniency in NPA norms for banks, tax filing firms to be provided with an additional 50 per cent working capital limit on their existing limits without any additional security, etc. Demand for all non-essential items will take a beating, and therefore, several companies need to essentially decide whether they can sustain the deficit and whether their business can spring right back soon after or would the demand just collapse or evaporate. A relief package for sustaining small businesses is in the works and must help address their liquidity issues on an urgent basis without too much of red tape. There is also an urgent need to refund taxes and incentives to exporters must be released. Also read: How to restart the economy during COVID-19  Is the government doing enough to handle the crisis?  Construction and Infrastructure can kickstart the economic engines How will the future Post-COVID19 unfold?  About the Author: A chartered account by qualification, Pratap Padode is the founder of ASAPP Info Global Group and his passion for infrastructure over last 20 years is reflected in the innovative thought leadership through 10 specialised journals, conferences and awards organised in the fields of construction, infrastructure and engineering. CONSTRUCTION WORLD was the first journal that he began with over 20 years ago. Further, he is the Founder & Executive Director of FIRST (Foundation of Infrastructure Research Studies Training ), which was set up in 2003, that brings out research reports and newsletters on various infrastructure segments. He received the CIDC Vishwakarma Award 2010 for his research in the construction sector. Since early 2014, he has been promoting the cause of smart cities in India and is now Founder & Executive Director of the Smart Cities Council India.

Next Story
Infrastructure Energy

Centre suggests states to list power firms

Power Minister Manohar Lal urged states and union territories to consider listing their power generation, transmission, and distribution companies on stock exchanges to attract investment and improve operational efficiency. Addressing the media, after a conference of power ministers, Lal highlighted the need for increased capital inflows to meet India’s rising power demand, which has placed added strain on the sector. “With the growing power demand, there is a growing need for investment in the sector and improving operational efficiencies. States may identify and take up utilities for lis..

Next Story
Infrastructure Transport

Metro on backburner as Tricity set to get new e-buses circuit

To boost connectivity for the commuters of the Tricity, a new circuit-cum-network of electric buses (e-buses) is all set to come up that will cover Chandigarh, Panchkula, and Mohali. The move comes days after Union Minister for Housing and Urban Affairs Manohar Lal Khattar said that in Chandigarh the ridership is not according to the criteria set for operating a Metro. He had also said that the option of a pod taxi can also be explored as it will not impact the heritage of the Union Territory (UT).Officials stated that the e-buses decision intends to provide an eco-friendly public transportati..

Next Story
Infrastructure Energy

Rajasthan government plans to develop hi-tech city near Jaipur

On the lines of Gujarat International Finance Tech (GIFT) City and Hyderabad Information Technology and Engineering Consultancy (HITEC) City, Raj govt is gearing up to develop a "hi-tech city" close to Jaipur. Recently, Boston Consulting Group – a multinational consulting firm – gave a presentation on the concept of hi-tech cities, follwing which the state govt has started looking for suitable land on outskirts of Jaipur. "We are going to construct a hi-tech city on the outskirts of Jaipur. We are trying to ascertain the amount of land required for core areas of the city and for areas wh..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000