'Perhaps they want MSMEs to die'

'The finance minister said, the MSME is the backbone of the economy. My question is, what have you done for the sector?'

One sector that continues to struggle despite all the stimulus packages announced by the government is the MSME sector (Micro, Small and Medium Enterprises).

It all started with demonetisation, followed by the faulty implementation of GST.

Then came the pandemic and the circle of woes was complete.

Reports say 9% of MSMEs have closed down due to the pandemic in the last two years.

K E Raghunathan, convenor, Consortium of Indian Associations, who had told Rediff.com last year that the MSMEs were in the ICU, says that this year they are either suffocating or in the burial ground now.

The first of a three-part interview with Rediff.com's Shobha Warrier:

In this year's Budget speech, there was no mention of the MSME sector. Do you think the government has decided to leave the sector to take care of itself?

The Budget speech was an absolute disappointment, from the point of the suffering MSMEs.

We thought the finance minister would come up with some proposals to help entrepreneurs as around 52 sectors which suffered badly due to government-imposed restrictions are suffocating.

According to the finance minister, India is back on the rails, and has become the fastest growing economy.

So, she said this year, relief would be given to those who were not eligible for relief earlier.

The Rs 5 lakh crore credit guarantee schemes (ECLGS) got extended till March 2023.

But almost 30% of those who have availed the loan, have not availed withdrawal till now.

What does it indicate -- either a. They are not sure of repayment or b. The quantum is insufficient.

Then, those who really want the money, are not made eligible.

For example, the scheme was available for SME- 0 and SME- 1 category account holders whereas SME-2 account holders are not eligible.

The finance minister said the MSME is the backbone of the economy. My question is, what have you done for the sector?

According to the government, they have been helping through various packages, but the sector has not been coming up at all...

I will tell you another story. The MSME ministry has come out with its annual report 2021-2022, and it is in the public domain.

If you go through that report, it quotes MSME data that was taken 7 years ago, that is of 2015-2016. It says that there are 6.33 lakh crore MSMEs in 2015-2016.

Imagine this is the report by the ministry of MSME. The ministry has not updated any data in the last 7 years. They haven't done any fresh analysis.

You say that the MSME sector is the backbone of the Indian economy, but the ministry does not have even the latest data.

How can a ministry not know how many enterprises are there, which sector they belong to, how many in each state, employment creation etc? How can you support them without these basic inputs?

In the report, the government talks about its contributions as under MSME Samadhan to address delayed payments to the MSMEs.

But nothing has happened on the ground. Today also, people are crying because payments are delayed.

Then they talk of an MSME Sambandh portal launched 5 years ago, which is supposed to be monitoring the procurement by central government ministries, departments and central public sector enterprises and enabling them to share the list of required products and services from the MSMEs.

Then, there is a job portal called 'MSME Sampark' which not many use. In fact, nobody knows about it as well!

Though the government talks about the sector contributing to 30% of India's GDP, do you feel there is a lack of real concern on their part?

That is because there is lack of knowledge, lack of intelligence and lack of capabilities to come out with proper solutions.

There is a huge disconnect between what is happening on the ground and the policy makers.

Or they don't want to help the sector. Perhaps they want the sector to die.

The finance minister went to Mumbai and told the banks to go easy on extending loans.

How is that possible unless norms are relaxed and availability of grievance system in place?

• Part II: 'What kind of jobs are you talking about?'

Feature Presentation: Aslam Hunani/Rediff.com