Economic Survey Shows MSMEs Received Only 17% of Credit Outstanding

New Delhi: The medium and small enterprises (MSMEs) face major problems in terms of getting adequate credit for the expansion of business activities, according to the Economic Survey tabled in the Parliament on Monday.

“Latest data on credit disbursed by banks shows that out of a total outstanding credit of Rs 26,041 billion as in November 2017, 82.6 per cent of the amount was lent to large enterprises. The MSMEs received only 17.4 per cent of the total credit outstanding,” said the Economic Survey.

Showcasing the importance of the MSME sector in the Indian economy, the survey said, “the share of MSME sector in the country’s Gross Value Added (GVA) is approximately 32 per cent. MSMEs in India play a crucial role in providing large scale employment opportunities at comparatively lower capital cost than large industries and also in the industrialisation of rural and backward areas.

As per the National Sample Survey (NSS) 73rd round, for the period 2015-16, there are 633.8 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities providing employment to 11.10 crore workers.”

The survey observed that loans extended under the Pradhan Mantri Mudra Yojana during 2016-17 have crossed the target of Rs 1.8 lakh crore. “Of this amount, Rs 1.23 lakh crore was lent by banks while non-banking institutions lent about Rs 57,000 crore. In December 2017, total number of borrowers were 10.1 crore, out of which 7.6 crore were women,” said the economic survey 2018.

Voicing a difference in opinion on the BJP government's implementation of the new tax regime of Goods and Services Tax (GST), RSS-affiliated Mazdoor Sangh, while talking to News18 called for remodeling of GST to boost MSME.

“GST parameters were drawn up keeping uniformity in mind and in our country there are different sectors that contribute to the economy. They have unique characteristics and have to be considered individually, before designing anything. The government will have to remodel the GST structure in order to boost MSME and agriculture,” said Brijesh Upadhyay, General Secretary, Mazdoor Sangh.

Former Prime Minister Manmohan Singh, ahead of the Gujarat Assembly elections, had said that GST had adversely affected the MSME sector in the country, even more so in Gujarat.

“In Surat, 89,000 power looms were sold as scrap, which led to the loss of 31,000 jobs. There are countless such examples from industrial clusters and big mandis (markets) across the country," Singh observed in his speech at the Parliament.

Finance Minister Arun Jaitley, has meanwhile, reassured the MSME sector after a meeting with top economists ahead of the Budget and said that the government shall make sure the needs of the sector are taken care of.