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Helping flood-affected small businesses

The Smeda chief pointed out that the calamity has eroded an already weak infrastructure and, in many cases, swept away people's sources of livelihood that they had built with the help of loans taken from relatives or using their families' life-savings. Small business projects are usually run by enterprising people with limited resources.

Those who have lost them or suffered sizeable damage may not be able to regain strength without assistance. Considering that small and medium enterprises are a major source of employment generation, especially for the working class poor, letting them go under will further exacerbate the problem of pervasive poverty.

It is good to note that Smeda is actively seeking to take measures for the rehabilitation of the flood-affected small and medium enterprises (SMEs). The proposals under consideration include a credit mark-up sharing fund, provision of grants and soft loans to SMEs to enable them to rebuild their strength and restore their activities. Also, a dedicated helpline offering facilitation services as a 'One Stop Shop' is to be set up. Another programme is aimed at short-term skill training, upgrading of the existing skill base, and diversification of occupations to prepare flood affected people for trades that are likely to be in high demand in the recovery phase.

All of this is fine. But one important area that must also get attention is a plethora of labour welfare laws that small businesses are burdened with as soon as they become functional. Even normally, they are an encumbrance for small enterprises, all the more so in the present hard times. They should be given a reprieve at least for two to three years to allow a healthy recovery. Doing so will expedite revival of economic activity in the sector, creating the badly needed job opportunities.

It is important to set priorities. Access to finance has always been difficult for SMEs. Now that Smeda is paying attention to the issue, it must ensure that its proposal regarding (the one about grants seems to be rather ambitions given the government's severe resource constraints) soft loans is implemented expeditiously. Time is of essence. Delays will not only harm the prospects of recovery but also drive many desperate jobless people towards crime in order to make ends meet. Then, there is also the unsavoury reality that poverty tends to serve as a fertile recruiting ground for terrorists looking for foot soldiers to promote their nefarious objectives. The sooner the SMEs stand back on their feet, the better it will be for the economy and the people.
Copyright Business Recorder, 2010


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