It seems 2019 could well be the year of medium, small and micro-enterprises (MSMEs), with the government and even the Reserve Bank of India (RBI) admitting the importance of financing MSMEs, who are the economy’s backbone.
The policies initiated include debt relief of upto Rs 25 crores and creating an enabling growth environment. But announcements must be followed by implementation, or they will go the way of the loans within the 59-minute scheme. It flopped due to delays in disbursements. The schemes must be monitored if they are not to be reduced to “jumlas”.
The MSMEs, who provide a total of 11 crore jobs, need around Rs 45 lakh crores, of which just 17.4 per cent is given by banks. The rest are met through non-banking financial companies (NBFCs) and private lenders, whose rates are usurious.
Financial support is also expected to come from the surplus funds of the Reserve Bank. A committee formed by new RBI governor Shaktikanta Das will decide the surplus that the RBI needs to retain in its reserves. So the rest could be used to finance MSMEs. His predecessor Urjit Patel had resigned in protest against the use of the RBI’s surpluses by the government.
The importance of nurturing MSMEs cannot be underestimated. These provide nearly six crore jobs and are the backbone of our exports, accounting for nearly 49 per cent of exports. Many could become big corporates of tomorrow. The government also needs to source more goods and services from MSMEs as this could be a game-changer, particularly in rural India, which is home to nearly 60 per cent of our MSMEs.
