After MSMEs, Modi govt to target traders & retailers with ‘special package’

The retail sector has been grappling with intense competition from e-commerce players | Ruhani Kaur/Bloomberg

Modi govt ‘special package’ expected to include access to cheaper loans, while equipping retailers to compete with e-commerce players.

New Delhi: After micro, small and medium enterprises (MSMEs), the Modi government’s next focus could be the country’s retailers and traders, most of whom had been among the worst affected by demonetisation and the implementation of the Goods and Services Tax (GST).

In the run-up to the 2019 Lok Sabha elections, sources said Prime Minister Narendra Modi may soon announce a “special package” for the retailers and traders, which will allow them access to cheaper loans through an interest subvention scheme and insurance facilities.

“The package is in the works and may be announced soon. The final contours of this package are yet to be decided but this will provide the required boost to retailers, though some of them can be classified as MSME,” a banking source said.

Earlier this month, Modi had announced the 12-point ‘Support and Outreach Initiative’ for MSMEs. The government’s support and outreach initiative will help MSMEs get loans up to Rs 1 crore in 59 minutes.

The retail sector, which employs about 6 per cent of the country’s labour force and is categorised as unorganised, has also been grappling with intense competition from e-commerce players such as Amazon and Flipkart.

Sources said that the Modi government package may address this issue as well, by offering some technological support to the retailers to allow them to compete with the rising e-commerce sector.

With the general elections approaching, the government, the source said, could come up with more sops for other cash-starved industries.

“The government will have to keep the fiscal deficit target in mind but it is possible that there is a thin breach that is not a cause for worry,” the source added.

He also said that there could be more booster plans for sectors, including health and education.

Hit by DeMo

Demonetisation led to acute cash shortage for the cash-dependent retail segment. About 70-75 per cent of its businesses dropped in the initial six months of the exercise. The sector was also impacted by the implementation of GST.

While several sections have been talking about an imminent stimulus package, insiders said that the government is looking at “boosters that will have long-lasting impact” and can be termed as “good expenditure”.