MSE sentiment index dips in September quarter despite efforts from govt

Even as the Reserve Bank of India (RBI) and the Centre continue to hold discussions on providing relief to the small and medium enterprises, the CriSidEx index shows that sentiment among micro and small enterprises (MSEs) dipped marginally in the quarter ended September, compared to the last three months.

The CriSidEx index stood at 124 in Q2 FY19, marginally lower than 127 in Q1. The decline was marginal despite a plethora of headwinds, including seasonality, rising crude oil prices, rupee depreciation. The index had previously registered a value of 121 in Q4 FY18.

Among manufacturing firms, 37 per cent of respondents responded positively about overall business conditions in the quarter, down from 45 per cent in the previous quarter. While among service firms, it fell from 44 per cent to 38 per cent.

The index is based on eight parameters (five manufacturing and three services parameters) with equal weights. Firms from whom the responses have been elicited are CRISIL-rated enterprises and borrowers of SIDBI. It also includes micro enterprises funded by microfinance institutions (MFIs) that are, in turn, funded by SIDBI.

Within manufacturing, firms operating in segments such as auto components, metals and mining, chemicals and pharmaceuticals had a higher share of respondents with a good quarter. By comparison, segments such as food products, gems and jewellery and leather and leather goods had a higher share of respondents reporting a subdued quarter.

In the services sector, firms operating in the commercial services and supplies providers, healthcare and travel and hotels segments had the highest share respondents who had a good quarter, while media-related MSEs, logistics, and human resource service providers had a higher share of respondents reporting a subdued quarter.

While half of the respondents in the manufacturing and services sector expect a good next quarter, compared with the expectations of the previous quarter, there has been some moderation.

Within manufacturing, 50 per cent respondents were positive about the next quarter in the current survey round, compared to 60 per cent in the previous quarter. By comparison, in the services sector, it dipped marginally from 53 per cent to 50 per cent over the same period.