Saroj Kumar
Many MSME units are still not able to make profit. So the sector was expected from the new budget that some direct benefit would be given to them to help them run the business. But once again they were given the hope of borrowing. The small enterprises of the country, which provide work to crores of hands, have been facing difficulties for a long time. His difficulties increased with each passing day.
Economic reforms like demonetisation, GST only worked to destroy them. The pandemic killed small enterprises. The rescue measures taken by the government so far have not yielded the expected results. There were expectations from the new budget. But there are also borrowing hopes here. Whereas in times of unprecedented unemployment, small enterprises urgently need oxygen.
The government is now beginning to recognize that the pandemic has had an impact on the micro, small and medium (MSME) enterprise sector. But the impact data is not available. Tenders were invited in November last year to assess the impact. In two months, the selected agency was to give the picture of the MSME sector in the last five years, how many units are sick, or closed and how many new ones are open. How much progress has been made in this direction, there is no information at this time.
Meanwhile, a survey by the Small Industries Development Bank (SIDBI) has revealed that in the financial year 2020-21, sixty-seven percent of MSMEs were temporarily closed for three months during COVID, the profits of about sixty-six percent of the units decreased. The report of this survey, which came on January 27, 2022, was shared by MSME Minister Narayan Rane in reply to a question in the Lok Sabha on January 3, 2022. But due to the limited scope, this report does not give a complete picture of the MSME sector, how many units are sick or how many have closed.
The number of sick MSME units was last reported in 2017. The Minister of State for MSME, Haribhai Parthibhai Choudhary, in a written reply to a question in the Lok Sabha on April 11, 2017, said that the number of sick MSME units doubled in the last four years. In response, quoting the data of RBI, it was said that during the financial year 2012-13, the number of sick MSME units was two lakh twenty two thousand two hundred and four, which increased to four lakh eighty six thousand two hundred ninety nine during 2015-16. . Keep in mind, this figure is pre-demonetisation.
As MSME units deal mostly in cash, the sector was badly hit by the demonetisation that came into force on November 8, 2016. But no authentic data of impact was available. The government has not given any figures, it has been rejecting the figures of private agencies. This means that the policy makers were not serious about the disease of the MSME sector. Now that the data gathering exercise has started, the seriousness is understandable, and there has also been some hope.
At present, the malaise of the MSME sector can be gauged from the size of the NPAs. The Reserve Bank of India (RBI) data shows that the NPA of the MSME sector increased to one lakh twenty eight thousand five hundred two crore rupees in the financial year 2021, which was one lakh eight thousand seven hundred and four crore rupees in the previous financial year. . Whereas during the same period, the total NPA of banks came down by 7.1 percent and it has become seven lakh eighty thousand eighty five crore rupees. A sick unit is defined as the one whose borrowal account has been NPA for three months or more, or its loss has been fifty percent or more of the total capital.
The government took measures like Emergency Credit Line Guarantee Scheme (ECLGS) in May 2020 amid the pandemic to treat sick MSMEs without any data. According to a State Bank of India (SBI) research report dated January 6, 2022, about 13.5 lakh MSME accounts were saved through ECLGS, of which 93.7 per cent belonged to micro and small units (MSEs). As a result, loans worth one lakh eighty thousand crore rupees were saved from becoming NPA.
It has also been said in the report that if these accounts had become NPA, then 1.5 crore workers would have become unemployed. It is noteworthy that only registered MSMEs are able to take advantage of ECLGS, whereas out of six crore thirty lakh MSMEs, more than ninety percent are not registered. Now guess how many unemployed people would have been in these unregistered units. A data from RBI itself for December 2021 says that the bank credit growth rate of MSMEs was negative in September, October and November, registering -2.2 per cent, -0.5 per cent and -2.6 per cent respectively. That is, the enterprises did not take loans at all.
Many MSME units are still not able to make profit. So the sector was expected from the new budget that some direct benefit would be given to them to help them run the business. But once again they were given the hope of borrowing. The period of ECLGS has been extended till March 2023 and the guarantee cover limit has been increased from Rs 4.5 lakh crore to Rs 5 lakh crore.
Of this, Rs 50,000 crore is for the hospitality sector and related enterprises. It was announced to strengthen the CGTMSE (Micro and Small Enterprises Credit Guarantee Trust) scheme by infusing it with the necessary funds and it was said that under this scheme an additional credit facility of two lakh crore rupees will be available for MSEs. Those SMEs will be able to take advantage of the scheme, who are not eligible for loan under ECLGS. Under ECLGS, only those enterprises are able to take loans, which have any previous debt outstanding.
Measures have been taken to reduce the cost of MSMEs in the budget. Customs duty on raw materials has been exempted or deducted. At the same time, customs duty on finished goods has been increased. For example, the customs duty exemption given last year on steel scrap has been extended for one year, while the customs duty on umbrellas has been increased to 20 percent and the customs duty exemption on its parts has been withdrawn. In order to reduce the cost, the facility of accepting surety bonds as an alternative to bank guarantees for government purchases of MSME products has been given.
Except for the RAMP program in the budget, all other initiatives announced in the budget are already underway, which have been expanded. The question arises that when these initiatives have not been able to do anything special for the MSME sector so far, then what is the basis for further hope? Where is the problem after all? Actually, all the steps taken are focused on the organized or registered MSMEs. Such units have also benefited from these, may be in future also. But how many are the registered units? less than ten percent. Then what will happen to ninety percent? Whereas these ninety percent need help the most.
According to the data of the Ministry of MSME, out of about six crore thirty lakh MSMEs in the country, only seventy seven lakh sixty seven thousand seven hundred thirty four are registered on the enterprise portal. How will this sector survive if unregistered enterprises are not helped? Where will you find employment then? This condition of the MSME sector, which contributes about twenty nine percent to the country’s GDP, employs about eleven crore people, is a bad omen for the country’s economy.
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