‘India cannot afford fear-mongering’: Nirmala Sitharaman backs Modi’s austerity appeal- The Week

Amid the ongoing West Asia crisis, Finance Minister Nirmala Sitharaman defended Prime Minister Narendra Modi’s austerity call, stressing the need to focus on the “3Fs”—fuel, fertiliser and forex.

Speaking at a SIDBI (Small Industries Development Bank of India) event in Mumbai, the finance minister slammed critics who have built a cynical and pessimistic narrative after the PM’s appeal and underlined that India cannot afford fearmongering at this stage.

The crisis is borne by external events, and the domestic economy continues to be positive and resilient, the finance minister said.

Naysayers have created a “cynical and pessimistic narrative” after the prime minister’s appeal for austerity, she said, stressing that such observations are factually incorrect.

“It (the narrative) is wrong because it is fear-mongering. India cannot afford fear-mongering. We need to give confidence to the people with our words and with our actions,” she said.

Sitharaman highlighted that the issue of Rs 8.1 lakh crore locked in delayed payments for MSMEs is impacting their working capital and growth, and urged public sector undertakings not to exceed the 45-day window to make payments to them.

Meanwhile, Sitharaman also asked lenders to relook at the design of loans to tailor-make products, where repayments happen when an entity gets its revenues.

“My message to Sidbi and every banker here is that standard products cannot serve non-standard businesses,” she said, citing examples of how the income generations of businesses vary across multiple activities.

At present, loans are typically given on a monthly repayment basis, which may be weekly as well in the case of microfinance.

“A farmer-linked enterprise does not earn every month. A resort does not earn evenly through the year. A garment exporter waits for payment after shipment. A small auto-comp supplier waits for invoice clearance. A woman entrepreneur may have regular transactions yet no property in her name,” Sitharaman said.

“Why should all of them be given the same repayment structure?” the finance minister questioned, asking Sidbi to take the lead to ensure that credit is designed around the business cycle of an enterprise.

Sitharaman also asked Sidbi to expand into a market maker and a risk-sharing partner for small enterprises, and not just be a lender for such companies.

She also urged the body to take care of the debt capital requirements of startups.

There can be a far-reaching economic impact of supporting MSMEs, she said, adding that 32 crore Indians are employed in MSMEs.

“If we get the MSME credit right, we get the Middle Class right. If we get the Middle Class right, we get Viksit Bharat right. It is that direct. Don’t think that we can do banking the way we want and think all of them are disconnected,” she said.