MSMEs from Southern India to be affected by revised Tariff rates

The state government has imposed huge increase in the power tariff. This will tend to increase the cost of production for the MSMEs and lower profits. BHEL Small Industries Association (BHELSIA) has expressed dismay over the steep increase in power tariff.

"It is very unfortunate that the State Government has imposed huge increase in the power tariff. The objections raised during consultations have been totally ignored. Implementation of the revised tariff will result in total disaster for MSME units in Tamil Nadu," Rajappa Rajkumar, President of BHELSIA said.

The implementation must be paused immediately and there should be further consultations with industry associations, he said. The MSME units in Tiruchi, Tamil Nadu were already in a highly critical condition due to general recession since 2014.  Most of the units were under severe stress and 25 percent of the units had become Non Performing Assets, leaving several workers jobless. The Central government has only extended short-term relief. If the situation prevails, the MSME units may shift their operation to other states. This will affect the tax income of the State government in a big way, Mr. Rajappa Rajkumar said, appealing to the Chief Minister and the Electricity Minister to address the issue on a priority basis.

Image Source: PSU Connect

The Government should focus on the growth of industries which were limping back to normalcy after the upsets caused by COVID Pandemic, GST and demonetization. For the stressed MSME sector looking to revive its operations, an increased tariff rate from the power sector should be implemented in an orderly manner, ensuring the businesses are compensated and safeguarded from any loss as a result of proposed changes.

Source: The Hindu Newspaper