Including More Sectors: A Positive Step for Borrowers, According to FIEO
The COVID-19 pandemic has had a profound impact on the global economy, with businesses across various sectors facing unprecedented challenges. In an effort to support these struggling businesses, the Indian government has implemented various measures, including providing relief to borrowers through loan restructuring. However, there has been some hesitation in including more sectors in this relief package, with concerns over the potential impact on the banking sector. But according to the Federation of Indian Export Organisations (FIEO), including more sectors in the relief package should not be a problem, as borrowers are mandated to prove disruption to their business.
The FIEO, the apex body of Indian export promotion organizations, has been at the forefront of advocating for the inclusion of more sectors in the loan restructuring scheme. They argue that it is necessary to provide relief to businesses that have been severely impacted by the pandemic, regardless of the sector they operate in. This is a crucial step towards reviving the economy and ensuring the survival of businesses, especially in the export sector.
One of the main concerns raised by critics of including more sectors in the relief package is the potential risk to the banking sector. It is argued that expanding the scope of the relief package could lead to a surge in non-performing assets (NPAs) for banks, which are already burdened with a high amount of bad loans. However, the FIEO has addressed this concern by pointing out that borrowers are required to prove the impact of the pandemic on their business in order to avail of the relief. This means that only businesses that have genuinely been affected by the pandemic will be eligible for the loan restructuring, reducing the risk of NPAs for banks.
Moreover, the FIEO has also emphasized the need for a sector-specific approach to the relief package, as different sectors have been affected differently by the pandemic. For instance, the export sector has been hit hard due to the disruption in global supply chains and a decline in demand from major economies. Therefore, the FIEO has called for a separate relief package for the export sector, which would provide targeted support to businesses in this sector.
Another important point raised by the FIEO is the need for flexibility in the loan restructuring process. They have suggested that the restructuring should be tailored to the specific needs of each business, rather than following a one-size-fits-all approach. This would ensure that businesses are able to bounce back from the impact of the pandemic and continue their operations smoothly.
The FIEO has also highlighted the role of the government in providing support to businesses during this difficult time. They have called for the government to play a more proactive role in providing credit guarantee schemes and other forms of financial assistance to businesses, especially in the export sector. This would not only help businesses stay afloat but also boost the country’s exports and contribute to the overall economic recovery.
In addition to providing relief to businesses, the FIEO has also stressed the importance of addressing other issues that are hindering the growth of the export sector. These include high logistics costs, complex and time-consuming procedures, and lack of access to credit for small and medium-sized enterprises. By addressing these challenges, the government can create a more conducive environment for businesses to thrive and contribute to the country’s exports.
In conclusion, including more sectors in the relief package for borrowers is a positive step towards reviving the economy and supporting businesses that have been impacted by the pandemic. The FIEO’s arguments for a sector-specific approach, flexibility, and government support are crucial in ensuring that the relief package is effective and beneficial for businesses. It is important to remember that the success of the relief package will ultimately depend on its implementation, and the FIEO’s recommendations should be taken into consideration to ensure its success. Let us all work together towards a strong and resilient economy, where no business is left behind.
