Growth stagnant for 72% MSMEs in five years: CIA survey
The CIA proposed that the government establish an independent ministry for micro-businesses and the self-employed, as 82% of respondents warranted it, adding that it would help the sector with specific issues.
A survey by the Consortium of Indian Associations (CIA) found that nearly 87% of MSME respondents were dissatisfied with the Union Budget 2023.
This survey by the trade group also highlighted that 72% of micro, small and medium enterprises (MSMEs) respondents had not grown over the past five years.
The survey, which sought to understand the state of Indian MSMEs and their opinions on the Union Budget 2023, saw participation from about 1.08 lakh MSMEs from a variety of industries, including manufacturers, service providers, self-employed individuals, and exporters. It was conducted between February 2-8, following the Budget announcements.
It also revealed that only 21% of respondents felt the Indian government had sufficiently assisted MSMEs throughout the COVID-19 pandemic. Another 69% said they have not yet availed of government support, while 76% said they have not been making a profit currently.
Although the government made several initiatives to aid small enterprises, 45% of MSMEs believe that operating a business—whether starting one, shutting it down, or continuing it—is not easy.
Based on the results, the CIA proposed that the government establish an independent ministry for micro-businesses and the self-employed, as 82% of respondents warranted it, adding that it would help the sector with specific issues.
Further, the trade body proposed that the government amend the Micro, Small and Medium Enterprises Development Act, 2006, to strengthen state facilitation councils and make changes to the GST Act that would make it SME-friendly.
Highlighting a few Budget announcements, MSMEs said the move to create payment compulsion in 45 days is a good step. Moreover, the government's decision to refund 95% of the performance guarantee for items supplied during COVID-19 is also a positive move.
On the other hand, they emphasised the misses in the Budget, including a relaxation of the eligibility norms for ECGLS (Emergency Credit Line Guarantee Scheme) loans, a quicker response time on loan applications, assistance with sector-specific demand creation, and more.
About 79% of respondents said that one of the biggest problems they face is access to bank financing. While 42% cited profit margin concerns, 70% cited delayed payment receipts, 40% spoke about raw material price and availability, 52% find adherence to statutory compliances is tough, 62% are worried about demand and order book position, and 38% fear manpower sourcing and employability skilling among youths.
Edited by Suman Singh