MSMEs (micro, small and medium enterprises) in India need to make full use of governmental policies targeted at this sector and grow into large enterprises over time, feels Rajiv Kumar, Vice-chairman of NITI Aayog.
Speaking at a high-powered discussion, along with Chandra Shekhar Ghosh, Managing Director and Chief Executive Officer, Bandhan Bank, Kumar noted that there were around 60 million MSMEs in India, which creates around 110 million direct jobs and many more indirect jobs.
The government was committed to ensuring the welfare of this critical component of the Indian economy and was facilitating several measures to ensure enough liquidity flows to these enterprises, Kumar said.
Ghosh noted that ₹3 lakh crore complete credit guarantee and the ₹45,000 crore partial credit guarantee scheme for MSMEs as well as the redefinition of the MSME sector were all significant decisions that would provide a great deal of support to the MSME sector.
In an interview moderated by CNBC-TV18’s Executive Editor, Latha Venkatesh, Kumar said that the NITI Aayog and the government of India saw the MSME sector as the very backbone of the economy. According to him, as per figures available for July 2020, out of the ₹3 lakh crore scheme, ₹1.37 lakh crore of loans had already been sanctioned and ₹90,000 crore already disbursed.
Kumar said that the biggest problem in lending financial assistance to the small sector was the inability to identify micro enterprises; and noted that it was important to get more granular data on this sector.
As someone who led Bandhan Bank’s transformation from an NGO, focussed on the welfare of poverty-stricken women in 2001, to an NBFC-MFI in 2009, and finally a full-scale commercial bank in 2015, Ghosh knows his ground well. He observed that 70% of MSMEs in India were domiciled in rural India and that better physical and digital connectivity through roads, electricity and broadband would lead to significant improvement in their business potential.
Ghosh also suggested that the MSME sector needed some reforms to further facilitate ease of doing business. He observed that an Aadhar Card or PAN Card could be applied for on a website in India, but a small entrepreneur trying to obtain a trade licence for his venture would still need to go through a physical process. The wait time to obtain a licence could be curtailed substantially if that process could also be completed online.
At the end of the discussion, Ghosh expressed optimism that rise in consumer demand would enable credit flow to MSMEs, who should see better days ahead.
This is a partnered post.
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