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Last Updated : Aug 14, 2020 06:06 PM IST

Sashakt India: Powering The MSME Engine

The government’s decision to set up the Government e-Marketplace (GEM) for wider participation and increased transparency, when it comes to sourcing from MSMEs, is a step in the right direction that will have far-reaching implications.

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At a time when economic growth in India has suffered on account of the Covid-19 pandemic, micro, small and medium enterprises (MSMEs) have been hit the hardest. Lack of size, availability of resources, inadequate access to finance, coupled with high finance costs and complicated labour laws have prevented India’s 63 million MSMEs from realising their full potential.

However, it is now widely recognised by all stakeholders – including policymakers and industry – that the welfare of MSMEs needs to be given priority. MSMEs will play a crucial role in helping India revive its economy and create the multitude of jobs needed to do justice to the country’s young demographic dividend. The government has rightly identified MSMEs as a growth engine that will power the nation going forward, and made this section of industry a centrepiece of its future economic strategy.

The government’s decision to set up the Government e-Marketplace (GEM) for wider participation and increased transparency, when it comes to sourcing from MSMEs, is a step in the right direction that will have far-reaching implications. The RBI has increased liquidity and cut rates to support MSME financing.  Also, the change in definition of MSMEs based on investment size and turnover will help many more companies come under the ambit of being MSMEs. This will help in the formalisation of the sector, as well as allow many more entrepreneurs to benefit from the government’s policies targeted at this sector.

Measures such as the announcement of a Credit Guarantee Scheme (CGS) of Rs. 3,00,000 crore for MSMEs, Rs. 20,000 crore for distressed MSMEs and a Rs. 50,000 crore venture fund for equity infusion should help MSMEs tide over the cash flow crisis created due to the pandemic and related disruptions.

The Vice-Chairman of NITI Aayog, Rajiv Kumar, has said that the central government is currently focused on saving MSMEs. "We need to create the culture of bringing angel investors for these small enterprises, how to bring technology...we need public policy steps to ensure that the small, medium and solo enterprises have access to the highest and most-developed forms of services,” he stated.

The vast pool of migrant labour, which has returned to the states, need to be absorbed in the several projects that will emerge out of this infrastructural push.

But the government, which is trying to achieve a fine balance between protecting lives and livelihoods can only do that much on its own, given fiscal constraints and the multiple priorities that it needs to juggle.

While the government and the Reserve Bank of India have taken several measures to ease the woes of the MSME sector, the challenge often lies in on-ground implementation: establishing a credit delivery system targeted at those enterprises who need timely access to reasonably priced credit.

MSME financing, therefore, is likely to emerge as a major growth opportunity for banks and financial institutions going forward.  Banks such as Bandhan Bank that have an existing, deep connect with small enterprises and entrepreneurs, who are often based in India’s semi-urban and rural areas will be well-poised to cater to this segment of customers and contribute to this cause of nation-building.

The government’s future roadmap for bolstering India’s burgeoning MSME sector and the role that private sector financial institutions can plan therein will be points that will be highlighted and deliberated upon during a high-powered discussion, `Sashkt India: Powering the MSME Engine’, Presented by CNBC-TV18 and Bandhan Bank. The discussion will be aired on CNN News 18, CNBC-TV 18 and CNBC Awaaz, on Independence Day, August 15 at 12.30 pm.

The panel will comprise of Rajiv Kumar, Vice-Chairman, NITI Aayog and Bandhan Bank’s Founder, Managing Director and Chief Executive Officer, Chandra Shekhar Ghosh. The panel will be moderated by CNBC TV 18’s Executive Editor Latha Venkatesh.

This is a partnered post.

 
First Published on Aug 14, 2020 06:05 pm

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