Why Indian industry needs more than MSME sops
News
Data from the Centre for Monitoring Indian Economy (CMIE’s) suggests that MSME have shown signs of a recovery in the past fiscal year
Important facts
Trends:
- Net Sales:
- Net sales of MSMEs declined considerably between fiscal year 2012 and 2016. However, it improved in 2017-2018.
- The improvement in net sales growth for MSMEs has been entirely driven by the manufacturing units’ sales growth
- However, sales growth in the services sector declined for the third consecutive year in 2017-18.
- Credit: Data from Reserve bank shows that credit growth has also improved in recent months with the entire improvement led by credit growth to medium-sized enterprises.
- Jobs: The small and medium-sized enterprises has cut jobs for the seventh straight year in 2017-18.
Recent Government Measures for MSMEs:
- 59-minute loan portal (loans up to 1 core) to enable easy access to credit for MSMEs.
- 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.
- Increase in interest rebate from 3% to 5%, for exporters who receive loans in the pre-shipment and post-shipment period
Pertaining issues:
- Regulatory red tape
- uncertainties in tax and investment policies
- infrastructural deficits
- Size-based policy relief measures: The measures are often counter-productive and discourage firms to grow by creating strong incentives to operate beneath the official size category.
