Efforts should be made at the right earnest to strengthen Micro, Small and Medium Enterprises (MSME), to further strengthen the Indian economy as this particular sector acts as the supply line for bigger industries. The sector has suffered huge losses during the pandemic and many MSMEs have been forced to shut since then. The situation has not changed much even after the withdrawal of pandemic-induced restrictions. This particular sector is facing numerous problems, threatening its very existence. Firstly, the prices of raw materials have sky rocketed, along with abnormal rise in fuel prices; both of these factors together have increased production cost considerably. Due to the rise in production cost, it has become difficult for MSME owners to arrange adequate capital required to run the businesses as the hike in repo rate by the Reserve Bank of India (RBI) has made loans costlier. Moreover, MSMEs have to wait long periods of time to get their dues from clients, which includes both public sector undertakings (PSU) and the private sector. As a result, even after the resumption of normal business activities, MSMEs are continuing to pull down their shutters on facing bankruptcy. It is time for the authorities to come forward with necessary help to save this sector which provides income to thousands of Indians from ruin.
With a GDP growth rate of 8.7 per cent in the last fiscal, India is now one of the fastest growing economies of the world and the MSME sector has contributed hugely in achieving the commendable feat. The sector should not be neglected, rather due to the gravity of the situation steps must be taken to ensure that the sector can once again breathe easily. Efforts should include reducing the price of raw materials and ensuring proper supply; providing lower interest rate for the MSME sector; increasing the span of repayment of loans; making it mandatory for clients, especially the PSUs to clear dues within 45 days of delivering the order, etc. These steps will help MSMEs regain pre-pandemic health as cheaper raw materials will lower the production cost, which in turn will help in increasing the volume of business. Similarly, RBI should consider providing preferential treatment in terms of interest rate at this hour of crisis, as it will be impossible for the said sector to survive by paying the same interest rate as big industries. Further, RBI should favourably consider increasing the time limit for repayment of loans. At present, MSMEs are given 90 days for repayment of loans. The demand is to make it 120 days to ease the financial burden on MSMEs. Another important fact, which should not be neglected, is that clients should be asked to clear dues on time as it aids MSMEs to clear their bank loans on time. Any delay in making payments to MSMEs will break the cycle, creating more hardships. All the aforementioned steps are crucial in providing MSMEs the requisite strength to bounce back.