New Delhi: Finance minister Nirmala Sitharaman and her cabinet colleague transportation and small enterprises minister Nitin Gadkari on Tuesday sought suggestions from micro, small and medium enterprises (MSMEs) on ways to improve their access to credit.
The consultation is part of efforts to address the economic downturn taking suggestions from representatives of a host of industries and the banking sector that the government had announced last week. Sitharaman had already met chiefs of state owned and private banks on Monday.
Credit availability to small businesses is crucial to economic growth as a significant part of value addition in the manufacturing sector takes place in the MSME sector, which also is a large job creator in rural and urban areas.
Tuesday’s meeting was also attended by senior officials including revenue secretary Ajay Bhushan Pandey. The government intends to arrest the economic slowdown by boosting consumption, improving liquidity to businesses and to the non-bank sector and by reforming labour laws. The non-bank sector is a key source of funding for the MSME and housing finance sectors.
The government has been taking steps to improve access to credit to small business for some time now but companies feel more could be done.
“Despite the emphasis given by the government and the RBI on lending to the MSME sector, bank lending to this sector in FY19 has been way below target. MSMEs are not getting funding properly. Also, many large companies are struggling. Since MSMEs are dependent on large companies for business, it impacts them as well," said Chandrakant Salunkhe, founder and president of the SME Chamber of India.