The government is working on a relief package for small retailers, an official directly involved in drafting it said on condition of anonymity, adding that small retailers have been hit hard by the lockdown.
Last month, trader body Confederation of All India Traders (CAIT), representing more than 70 million small retailers, demanded bank loans at special interest rates, a government-backed insurance for traders and employees, and a wage protection plan or subsidy that will allow owners of kirana (Mom and Pop) stores to pay their workers.
The government’s decision to allow the sale of non-essential products through standalone shops is widely seen as being aimed at small retailers.
The government may also consider a revision in the scheme launched last year to provide pension to small traders. The pension plan was aimed to give old age protection and social security to retail traders, shopkeepers and self-employed persons whose annual income did not exceed Rs 1.5 crore.
India’s small retailers run 12 million shops, employ 40 million people, and are responsible for an annual business Rs 700 billion, according to a report published by Assocham.
“Small retailers need to continue to pay rentals and expenses like electricity, etc, while their stores have been shut in case they are not carrying essential goods or are operating at lower than 100% efficiency due to lack of goods from the companies reaching the retail points of sale. Hence, they are struggling to be viable businesses. At the same time, the tendency of the consumer to go digital and use e-commerce channels has increased due to safety concerns of Covid19 and this is beginning to cannibalise business from small retail too,” said Harsha Razdan, partner and head of consumer markets and internet business at KPMG India.
Chandrajit Banerjee, director general, Confederation of Indian Industry (CII), too said: “The kirana stores need liquidity as they were not allowed to sell non-essentials and in many areas which were under complete lockdown these stores were not allowed to operate.”
The government’s relief and fiscal stimulus plan has been in the making since late March, and it isn’t clear why it hasn’t been announced. Industry bodies have asked for a package of Rs 14-16 lakh crore to help offset the impact of the lockdown.
The official cited in the first instance said that the government is also considering a package for oil marketing companies that have been hit hard by a fall in demand. In April, demand declined 70% as compared to a year ago , petroleum minister Dharmendra Pradhan said last week.
Since then, there have been signs of a recovery in demand after the government allowed industries to operate, and relaxed restrictions on movement, but the official said this might not be enough to offset the losses of the companies. Also, with 84% of the Centre’s excise collection coming from oil sales, the government is very sensitive to the criticality of fuel sales, this person added.
