By Gyan Pathak
Medium,
Small and Micro Enterprises (MSMEs) are a major engine of growth and employment
in the country, only next to Agriculture. However, lakhs of them have already
closed due to cash crunch after demonetization order of November 2016. Majority
of the units have been struggling for survival with additional burden after
introduction of GST in July 2017. They required some urgent measures for
revival, but the Budget 2019-20 has frustrated their hope. The claimed
‘all-time high allocation’ of Rs 7011 crore to the Ministry is too small an
amount to handle the crisis the sector has been thrown into by the Modi
government in their policy experiments.
The
‘all-time high’ claim can be misleading to the people because it conceals the
fact that the growth of MSME GVA has been sharply declining since 2012-13 when
it was 15.27 per cent. The latest data available with the Central Statistics
Office (CSO) shows that the growth rate declined to 7.62 per cent at the end of
March 2016 per cent of the GDP. When we consider it in the backdrop of the
widening of the domain of this sector across sectors of the economy producing
diverse range of products and services the relative growth of each individual
sector, it is clear that all of them are declining. The trend aggravated more
sharply after demonetization and introduction of GST.
The
‘all-time high’ claim has also been made regarding the flagship scheme for
employment generation, namely Prime Minister Employment Generation Programme
(PMEGP) for which an allocation of Rs.2327 crore is made for the year 2019-20. But
what about performance of the scheme? Only a little over 26,000 enterprises
were benefited by March 2018, but about 40 lakh people have already registered
for their new enterprises by December, 2017.
The
Budget has reiterated the Government’s focus on creation of sustainable
employment in the non-farm MSMEs, but they are hollow promises and announcement
which does not cater to the real needs of the survival of this sector. We can
give example of the Trade Related Entrepreneurship Assistance And Development
Scheme For Women, which was among the 22 flagship programme under the Ministry
of MSME, and was launched by the government with a great fanfare. However, the
scheme itself was wounded up during 2017-18.
The lure of the big announcement was thus reduced to cipher.
The
performance of other 21 schemes are also not very encouraging though the
announcements were big and attractive. The number of beneficiaries are too
small to make any considerable impact on the whole. The latest annual report shows that under
Marketing Assistance Scheme the number of beneficiaries were only 334 and
Credit Linked Capital Subsidy Scheme benefited only 4081. These are but only
examples to show how the government’s efforts are too small compared to the the
133 crore population of the country.
To
provide funding for the 2% interest rebate on incremental loan up to Rs.1 Crore
for GST-registered MSME units, the budget of Rs. 350 crore has been provided
under ‘Interest Subvention Scheme for Incremental Credit to MSMEs’. However,
government is still in the process of implementing the last budget’s
announcements regarding the GST mechanism. Among the achievement of the
government Piyush Goel said that Working Group has been constituted to decide
the policy guidelines on flow-based lending using GSTN to MSMEs through Fintech
Companies. For ensuring credit support, capital and interest subsidy, the
Government is clearing all pending liabilities under Credit Guarantee Scheme
(CGT-MSE) and Credit Linked Capital Subsidy Scheme (CLCSS). This year already
Rs. 311.00 Crore have been released to the Credit Guarantee Trust for MSEs and
Rs. 941.76 Crore have released to the concerned Banks / FIs for clearing the
liabilities of the CSCSS. Government is exploring the possibility of data sharing
from GSTN for enabling reducing delays in sanction of credit to MSMEs.
Under
the recent announcements made on 2nd November 2018, encompassing multiple
initiatives and interventions for the MSME sector, 20 large and 100 small
Technology Centres are going to be set up with a support of Rs.6000 Crore. This
Budget has made allocation for this initiative, it was said. It is again a
promise regarding which the Government’s track record makes us apprehensive. It
is worth mentioning that the earlier announced 15 technology centres are still
under development and the progress is very slow.
For
setting up clusters in the manufacturing and artisan sectors, Rs.450 crore has
been allocated. Allocation under National SCST-Hub has been increased. Mission
Solar Charkha has been launched in the current financial year, for which Rs.143
crore has been allocated under the BE 2019-20. The scheme envisages setting up
production clusters, each employing 2000 youth in the rural area, at least 50%
of which would be women.
There
are also several other announcements but on the whole, the Budget 2019-20 cannot
reverse the MSMEs on the path of their survival in near future. The dead,
dying, and grievously suffering smaller units are almost left to survive on
their own. The only measure thing this government has achieved is the
redefining of the MSMEs in February 2018. The old investment based
classification was done away with the new turnover based classification. The
same turnover based criteria have been applied for all types of MSMEs including
those operating in service sector.
The
upper limit for micro, small, and medium enterprises were raised from 25 lakh,
5 crore and 10 crore rupees to 5 crore,
75 crore, and 250 crore. It was done only to make a rosy picture of the data as
alleged by the opposition which was also indirectly admitted by one of the
statements in the Budget 2019-20 on implementation of the budget announcement
of the FY-2018-19 which had provided only 3794 crore to MSME sector for giving
credit support, capital and interest subsidy and innovation.
Logically,
the budgetary provisions should have been more in the backdrop of the
redefinition with the upper limit considerably enhanced. The another
achievement as mentioned by Piyush Goyal is the “Massive formalization of the
businesses of MSMEs in the country after demonetization and introduction of
GST. This is generating enormous financial information database of MSMEs’
businesses and finances. This big data base will be used for improving
financing of MSMEs’ capital requirement, including working capital.”
Out
of about 634 lakh registered MSME units in the country only 4000 enterprises
are large. Lakhs of them are now not in operation. The sector gives employment
to about 12 crore people. About 60 per cent of the enterprises are in the rural
areas and 40 per cent in the urban areas. About 20 per cent of the units are
run by women, 50 per cent are run by OBCs, 4 per cent by STs, 33 per cent by
General, and 13 per cent by SCs. The top
ten states which were harmed most by the policy experiments of the government
are Uttar Pradesh, West Bengal, Tamil Nadu, Maharashtra, Karnataka, Bihar,
Andhra Pradesh, Gujarat, Rajasthan and Madhya Pradesh. The horrible condition
thus impacts mainly the rural people, women, SCs, STs, and OBCs which is
certainly going to adversely affect the political fortunes of the BJP in the
Lok Sabha elections of 2019. (IPA Service)
The post Mere Tall Claims Could Not Reverse The Decline Of Msmes appeared first on Newspack by India Press Agency.
