Hyderabad: Former Prime Minister Dr Manmohan Singh has recently cautioned that a debt crisis is staring at the face of India. The remarks made by the author of India’s economic reforms are highly pertinent. His warning that the small and medium scale industries will sink under the impact of the crisis cannot be repudiated.
The Micro, Small and Medium Enterprises (MSMEs) which were facing severe crises even before the advent of the Covid-19 pandemic, suffered a mortal blow with the lockdown imposed under unavoidable circumstances.
The Reserve Bank of India had earlier confirmed that in their struggle for survival, MSMEs were swimming against the current. Even during the pandemic times, the MSMEs did not receive any support. The credit rating agency, Moody’s, has concluded that the Central package has failed to resuscitate the minor industries, thus clearly mirroring the predicament of MSMEs.
Studies have concluded that small industries require succour of Rs 45 lakh crore. However, banks can provide only less than 18 per cent of the required help.
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Minor industries have been contributing to the country’s economic progress despite their limited investments by not only providing over 11 crore jobs but also manufacturing a wide variety of goods.
In times of their crisis, the industries are left to look for help with supplicant and desperate eyes. Immediate corrective measures should be taken with the understanding that helping this sector will be in the national interest.
According to the Ministry concerned, there are 6.3 crore minor industries in the country and they are contributing 30 per cent to the nation’s Gross Domestic Product.
In neighbouring China, nearly 3.8 crore small and medium industries contribute 60 per cent of that country’s GDP. Almost 80 per cent of job opportunities in China are generated by this sector. According to an estimate, around 16,000 to 18,000 new companies are coming into being in China every day.
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Not only China, countries like the USA, Japan and Singapore are also encouraging small and medium scale industries by encouraging technological and other support to them as they understand the significance of the sector as a life-giver to their economies.
Countries like Canada, South Africa and Brazil are also implementing policies that benefit minor industries. The reason behind Germany’s better employment scenario is the encouragement being given by the country to its Small and Medium enterprises, called Mittelstand.
The Confederation of Indian Industries (CII) has already suggested how the pandemic afflicted minor industries can be revived. It has called for a three-year exemption to the small and medium industries sector from all rules and regulations.
Loans are sanctioned to the sector in ‘59 minutes’, but it takes a long wait for the amount to be released. The announcements of financial stimulation lack sincerity. Financial assistance following eligibility, skill development training to workers and connectivity with the market is the essentialities to be provided to minor industries in these critical conditions.
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