Credit flow to micro, small and medium enterprises to double in Five Years

The Prime Minister, Dr. Manmohan Singh, gave away the National Awards to Micro, Small and Medium Enterprises for their outstanding entrepreneurship in New Delhi on 28 August 2009 . Following is the text of the Prime Minister’s address on the occasion:

“I am very happy to be in your midst in this National Awards Function for Micro, Small and Medium Enterprises. This is an occasion to recognize excellence of entrepreneurs and institutions and individuals in this very important segment of our economy. I greet and heartily congratulate today’s awardees. Their accomplishments bear testimony to their sustained hard work and great business acumen under difficult economic conditions.

Let me once again state what I have said on a number of occasions earlier: Our Government attaches the highest priority to the development of MSME sector. This was the reason why we had created a separate Ministry for Micro, Small and Medium Enterprises in the year 2004. I am very happy that the Ministry has done well after its creation. I compliment and congratulate Shri Dinsha Patel, Minister for Micro, Small and Medium Enterprises and his talented team of officials for their continuing hard work for the promotion, development and expansion of the MSME sector.

This important sector is an important component of our national economy. It provides employment to nearly 60 million people and contributes over 45% of the total manufactured output and 40% of our exports earnings. The growth and good health of these enterprises is therefore not only crucial for our economy as a whole, but also for protecting the livelihood and well being of a very large section of our people.

A large segment of micro and small enterprises lies in the unorganized sector. The establishment therefore of the National Commission for Enterprises in the Unorganized Sector under Dr. Arjun Sengupta was a serious effort of the previous UPA government to look after the requirements of this sector and the well being of those working therein. This Commission has made a number of very useful recommendations and we have already implemented some of them. The examination of the remaining recommendations will be completed very soon.

As you all know, the recent global economic slow down has had an adverse impact on the growth of our economy. Micro, small and medium enterprises have also not remained unaffected. But I can say with some satisfaction that the Government has been alive to the needs and concerns of the sector. Following my interaction with the representatives of this sector in December 2008, I had issued instructions for the careful examinations of the demands put forward at that conference. I am happy that the stimulus packages that the Government announced in coordination with the RBI contained many measures, which have been of help to this sector. These measures have been taken forward in the Union Budget of 2009-10.

But I do recognize we need to do more to realize the full development potential of this very important sector. It is in this pursuit that I have had the benefit of taking a meeting with the representatives of this sector two days back and I have issued directions for constitution of a Task Force that would look into the remaining difficulties still being faced by this sector. After the recommendations of the Task Force are available within a time bound period of three months, we will decide on how to further move ahead on this road to provide relief and support to this important sector. Let me assure each one of you that your concerns will continue to receive our government’s very serious and honest consideration.

At this meeting two day’s ago, it was pointed out and rightly so that credit is the lifeline of any business more so for businesses in MSME sector. Our government is committed to double the flow of credit to MSMEs in five years. I note with some satisfaction that loans outstanding to this sector from the public sector banks have registered a growth of close to 25% during the one year. Today we have felicitated some public sector banks for their commendable role in providing credit to MSMEs. I would urge other banks also to ensure higher flow of funds to these enterprises. Greater availability of credit can contribute to the faster modernization and expansion of these enterprises and the augmentation of their productivity and competitiveness. I would urge MSMEs to also explore new and emerging sources of finance such as venture capital and private equity.

The effort of our government is to enable entrepreneurs in the MSME Sector to get one-stop access to facilities for capacity building and skill development, credit, marketing support and quality technology. This would, I believe, enable them to execute their projects speedily and achieve better results. To this end, 2000 clusters have been identified across the country and specific interventions are being carried out in 500 of them to start with. I am told that response of entrepreneurs and other stakeholders to these initiatives has been encouraging. I am also very happy to know that a programme of comprehensive reforms in the Khadi sector is planned to be launched with assistance from the Asian Development Bank. And I congratulate Kumud Ben for the leadership that she has provided to this very important segment of our economy. I would urge the State governments and banks to work hard for the success of these programmes in active collaboration with various development agencies of the government.

In order to improve the competitiveness of MSME sector, the National Manufacturing Competitiveness Programme will have to be implemented in the right earnest with the cooperation of Industries Associations, technical bodies and all other stake holders. I am sure, with the implementation of schemes for lean manufacturing, Mini Tool Rooms, the Design Clinics, business incubators and ICT applications the competitiveness of these units will increase considerably. This will require of course sustained efforts of all the stakeholders. I urge the industrial associations to take full advantage of these programmes.

It is important to get a clear picture of the opportunities available to and the constraints faced by the MSMEs. This requires more accurate data. I believe that the fourth All India Census of this sector will provide detailed information about the MSME sector. This will in due course of time help in formulating new policies and strengthening the existing ones for more effective implementation of development and promotional plans.

The function is being organized by the Ministry of Micro, Small and Medium Enterprises (MSME). Dinsha Patel, Minister of State (Independent Charge) for MSME preside over the function. National Awards were instituted in 1983 for outstanding entrepreneurship in Micro and Small Enterprises (MSEs). The Awards are given to MSMEs for outstanding performance in Entrepreneurship, Research and Development and Quality; to banks for lending to the micro and small sector; to honour one outstanding woman entrepreneur; and one outstanding entrepreneur from SC/ST community.

The First, Second and Third National Awards for Micro and Small Enterprises for 2008 awarded to entrepreneurs from Maharashtra, West Bengal and Gujarat respectively.

A woman entrepreneur from Andhra Pradesh has won the Special Award under the category of women entrepreneurs and special award for SC/ST entrepreneur has gone to Gujarat. A women entrepreneur from Sikkim has won the Special Award from NER.

The first and second National Awards for Medium Enterprise won by entrepreneurs from Karnataka and Rajasthan respectively. An entrepreneur from Haryana won first National Award and entrepreneur from Kerala won the second award for the Micro and Small Enterprises rendering Services. Special Recognition Awards given to 14 entrepreneurs/enterprises.

The National Awards Scheme has had a positive impact on the MSMEs. The awardees have benefited by way of larger orders booked, higher credibility with bankers and improvement in brand image.