MSE package inadequate

Industrial and Financial Reconstruction Association for Small and Tiny Enterprises (IFRASTE) and National Confederation of Small Industry (NACOSI) have come down heavily on the policy prescriptions for micro and small enterprises (MSEs).

D E Ramakrishnan, president, IFRASTE and NACOSI, said, "The policy talks about Small Industries Development Bank of India (SIDBI) scaling up and strengthening its credit operations for micro enterprises and covering 50 lakh additional beneficiaries over five years beginning 2006-07. It also talks of the government providing grant to SIDBI to augment SIDBI's portfolio risk fund for this purpose. This sounds hollow as 2006-07 is almost over and no funds have been provided so far."

A package including several financing initiatives were announced by the minister for small scale industries Mahabir Prasad in the Lok Sabha a day before the Union budget.

Among the proposals in the package were grants to SIDBI to create a risk capital fund to provide demand-based loans to micro enterprises and raising loan eligibility limits.

"Raising the eligibility limit under the credit guarantee fund to Rs 50 lakh under the policy package would serve no purpose as the average loan extended under the scheme has been just over Rs 2 lakh," Ramakrishnan pointed out.

"Besides, while the statutory consultative mechanism under the Micro, Small and Medium Enterprises Development Act, 2006, talks of a wide range of advisory functions at the national level, with wide representation of all stakeholder groups, we find that MSEs are grossly under-represented. Eventhough 12.3 million MSE units provide employment to 29.5 million people, we have only four MSE representatives on the advisory body," Ramakrishnan said.