SME confidence up on domestic demand

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SME Times News Bureau | 28 Dec, 2010
Small and Medium Enterprises (SMEs) see growth in the October-December quarter on increased domestic demand and improved prospects of credit availability, according to a survey as reported by PTI on Monday.

The survey conducted by the CII has showed that the Business Confidence Index (BCI) of SMEs for the current quarter is estimated at 67 points on the scale of 0-100, an improvement of 1.4 points over the same period last year.

SME's optimism about gross sales is driven by strong prospects of domestic demand rather than exports, the survey says, adding that Slow recovery in the western economies along with appreciating rupee against US dollar could be among the major reasons behind it.

The survey also reports improved outlook on prospects of credit availability for SMEs, even though it continues to be far below to be stated as 'most favourable'.

"With given upward pressure on interest rates, it may not be too long before credit cost starts adversely impacting the capacity expansion of this critical sector of the economy," the survey cautions.

While there is no separate data on SMEs, India's micro, small and medium enterprise (MSMEs) sector contributes 8 percent of the country's GDP, 45 percent of the manufactured output and 40 percent of its exports.

The sector provides employment to nearly 60 million people and creates as many as 10 lakh jobs each year. According to the fourth census of the MSME sector, the sector employs nearly 59.7 million people in over 26.1 million enterprises.

The survey also adds the services sector on average are expecting to perform better than their industrial counterpart.