Hyderabad: Insipient sickness among industries, particularly in and around Hyderabad, has been on the rise at 5 per cent each quarter of the year.
These industries have not been able to revive over the last three to four years due to the persistent power crisis combined with global trends. Moreover, no new industry in the sector has come up in the recent past, which is being looked upon as a red flag for the sector.
The industries had proposed relaxation of credit norms, setting up of a separate power discom for the sector, open access to power at higher costs to diesel subsidies from the government, but nothing has ben done.
Industry insiders say that the increase is alarming and needs immediate intervention from the government.
The MSME sector accounts for nearly 90 per cent of the industries that are tagged “insipient sick”.
The mounting problems since the last three years has already resulted in more than 70 per cent of the Small and Medium Industries becoming NPA (Non Performing Assets) and even bigger industries are finding it tough to revive.
“The industries have taken the hit since the last three years and the persisting power crisis (one day power holiday along with peak hour cuts) is making daily operations unviable. The worrying factor is that there has not been a single new industry in the sector setting up shop. Not only has the goodwill of the current industries been hit but the fact that there is no new industry shows that there will be no growth in the next two to three years in the sector,” said Mr A Nageshwar Rao, president of Federation of AP Small Industries Federation.
Meanwhile, banking support is also a crucial factor for the MSME sector. Banking policies haven’t been altered despite several requests to the RBI on relaxation of norms.
The sector has been requesting RBI to ensure better credit flow and to enable sick industries to repay loans in a relaxed manner.
Also, to increase the viability of the sick industries, interest free loans for purchase of gen-sets and diesel subsidy is a must.
“There was an earlier proposal for setting up a separate discom for supply to the industrial sector but it was not taken up. Even the plan for open access of power to bigger industries was taken up last year for a very short while. The government moreover doesn’t want to lose cross-subsidy benefits from the industrial sector by encouraging large-scale captive generation of solar power,” said a representative from the steel industry.
