Centre's stimulus package fails to stimulate Punjab

The Centre’s stimulus package to boost the economy may not be of much help to the industrial clusters in Punjab. Most of the units in the state fall in the category of small and medium enterprises. In fact, Punjab has over 200,000 SMEs. These units are facing problems due to delayed payments from their suppliers, especially in the automobile sector.

The units located in the steel city of Mandi Gobindgarh and manufacturing forging and castings for large auto companies informed that the financial stimulus may help in the revival of large players who had frozen their plans. The delayed payment from the large players affects their credit worthiness with the banks. “If we do not repay the debts within ninety days, our assets are declared non-performing assets,” said Dinesh Gupta of Mandi Gobindgarh.

He said they had created large inventories to supply the mother units and current fall in the orders had put them in shambles.

Further, the fall in the prices of steel slashed the value of their inventories and their credit limits were affected.

The textile cluster, which too is languishing due to over 40 per cent increase in the minimum support price of cotton, finds the financial packages to no avail. “There is lack of orders for the exporters and our payments are stuck,” said H S Cheema of Cheema Spintex.

The various measures taken by the Reserve Bank of India have extended the viability of liquidity but the small entrepreneurs said the benefit extended to them was minuscule. “We got a relief of 1 per cent to 1.5 per cent on bank lending,” they said.

Similarly, the sports goods cluster at Jallandhar, where the tiny units have already shut down, does not perceive much benefit from the financial stimulus.

According to Raghunath S Rana of Aresson International Private Limited, “The existing cut in the lending rate by commercial banks is not sufficient as the export market has become more competitive after the meltdown. The risk averting attitude of banks has hindered the expansion of many units.”