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Lack of reliable data major impediment to MSME growth
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IANS | 30 Oct, 2022
The micro, small and medium enterprises (MSME) sector, which is
considered to be the backbone of Indian economy, consists of a vast set
of an estimated 6.34 crore enterprises in the country.
However a major roadblock in the growth of MSME sector is the lack of reliable data about enterprises operating in this sector.
Surprisingly, the last MSME survey was conducted by National Sample Survey Office (NSSO) in 2015-16, i.e., six years ago.
This lack of reliable data, according to sources, is a major roadblock in the growth of the MSME sector.
Considering
the fact that the MSME sector itself has undergone changes in 2020 when
the coronavirus pandemic had erupted and they needed urgent credit
requirements, the need for a survey of the sector becomes all the more
pertinent.
The government may consider conducting a survey of the MSME sector soon, sources said.
The
survey would help estimate the actual number of MSMEs in the country
along with realistic assessments of their credit requirements, they
added.
Due to lack of regular survey, there is still a significant credit gap for the MSME sector and unmet demand remains substantial.
As
per the U.K. Sinha, Expert Committee on MSMEs' report, the overall
credit gap in the MSME sector is estimated to be Rs 20 lakh crore to Rs
25 lakh crore.
Along with the credit gap, the MSME sector is
often not able to borrow at globally competitive rates since there is
not sufficient and affordable financing available to financial
institutions that target the MSME sector.
MSME enterprises also
have to contend with delayed and erratic payments from their customers,
which makes working capital management and financing very difficult.
Since
few MSMEs have sufficiently predictable cash flows, it becomes
difficult for MSMEs to access affordable financing to operate and grow
their businesses.
Therefore, regular surveys of the sector would
significantly help bridge the credit gap for MSMEs in the country,
industry sources said.
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