Page 21 - August-2020-Issue

ARTICLE

performing economy before it
stops going south in later months
of Q3 and commences its journey
on a positive note in Q4. The MPC
of RBI has however suggested
that negatives in H1 would be so
strong as it would pull down the
positives in Q4 to end the full year
with a negative growth in GDP.

Stagnancy in Steel
Consumption
The shifting pattern of economic
growth in India with a near stag-
nant growth in industry is not
conducive to the growth of the workers, the most vulnerable subvention to MSMEs on Mudra
commodity sector. India’s rich sections of our society, MSMEs, loans would aim to enhance the
mineral resources can be most real estate developers, mining purchasing power at the hands of
effectively utilised by the higher companies are significant and the consumers to enable them to
growth in steel sector. Thus more would be the enabling factor to generate demand through spend-
demand for steel needs to be en- initiate reforms (including labour ing route. Several facilities, ex-
couraged for a speedy develop- reforms) in getting rid of some emptions, subvention of interest,
ment of the mining sector. of the constraints under ease of higher credit trough NABARD
During FY12 to FY20, while share doing business.The total pack- and NBFCs are expected to re-
of Agriculture in GVA has fallen age worth of Rs.20,97,053 crores, solve the liquidity crisis plagu-
from 18.5 per cent to 14.6 per cent, according to analysts of Nomura ing the MSMEs and to secure
the service sector has enhanced Asia Economics can broadly be loans for meeting working capital
its share from 49 per cent to 55.2 grouped under Covid 19 related needs.
per cent with industry’s share measures, RBI liquidity measures As regards steel industry, the role
remaining stagnant or coming other fiscal and financial mea- of SMEs is displayed by nearly
down (from 32.5 per cent in FY12 sures. These would have a di- 50 per cent share on production
to 30.2 per cent in FY20). The rect and indirect impact on steel and major share in products like
stagnant growth of the most steel industry. TMT, Wire Rods, Structurals,
intensive sector (industry) over There are a number of steps en- Coated products and Tubes and
the last few decades continues to hancing the income of the farm- Pipes. Similarly the presence of
be the critical factor constraining ers (Rs 2 lakh crores additional SMEs in steel user segments like
the growth of steel consumption credit to the farmers Via Kisan construction companies, housing
in the country.
Credit cards, loan moratorium to companies, equipment including
farmers, credit to women jand- electrical equipment and tools
Stimulus Measurers han account holders, increase in manufacturers, food processing
It goes to the credit of the gov- MNREGA wages, support to mi- units, can manufacturers, Rail
ernment that it had announced grants and urban poor, free ration and road contractors, TLT manu-
a slew of reforms and specific through PDS, extension of tax facturers, bus builders, bicycle
actions to mitigate the toughest payments periods, 3-6 months, manufacturers, auto component
hardships suffered by the people moratorium on loans and gov- makers, steel fabricators and a
and various sectors of the econ- ernment guarantee for loans to host of other users of steel is sig-
omy due to the pandemic and MSME, raising the threshold nificant. Their rejuvenation in
consequent lockdown imposed. limits of bankruptcy under IBC, the post COVID-19 pandemic
The stimulus announced by the Rs.3 lakh crores loans to MSMEs scene, would contribute to pro-
government for farmers, migrant with 100% guarantee, interest duction and consumption of steel

Kaleidoscope August, 2020 21