Bengaluru, Mar 1 (KNN) The skyrocketing fuel price hike has completely eroded the margin of Micro, Small and Medium Enterprises (MSMEs) and they are faced with the threat of near extinction, said KASSIA in its reaction to the price heading towards three digits in Karnataka.

“Just when the micro and small scale industries have been battling the triple whammy of the economic slowdown, the lockdown and the coronavirus pandemic, the soaring petrol and diesel prices will eat into the operational costs of the MSME by nearly 25-30 per cent and this will hurt their very viability,” said K B Arasappa, President, Karnataka Small Scale Industries Association (KASSIA).

“The effect will be across the board, on manufacturing, machine tools, automotive spare parts, logistics, raw material cost, mass and individual transport, and lead to spiralling increase in prices of raw material and essential commodities,” he cautioned.

“The Centre has to take steps to arrest the hike as otherwise the V-shaped recovery it is expecting will be illusory. The state government too has to intervene by reducing VAT and bring down the price, as any delay will probably have an irreversible effect on the economy,” he asserted.

Calling for urgent action on the issue, KASSIA said there was definitely a scope for taking an appropriate decision in consultation with all the stakeholders involved, such as the petroleum ministry and oil companies, as the two-thirds of the end price of petrol and diesel constituted a surfeit of taxes, which could be reduced.

This was also critical to avoid any inflationary pressures on the economy which was just about beginning to see the back of a recession, it said.