Despite lower inflation and a slew of measures announced by the Centre to arrest the economic slowdown and boost growth in various sectors, the revival of the economy is unlikely to happen before 2009-end. As a result of the developments emanating from the United States starting with the sub-prime crisis, various sectors of the Indian economy are affected including the SME sector, George Joseph, convener of State Level Bankers Committee and, chairman and managing director, SyndicateBank said.
Addressing the special meeting of SLBC, held here to discuss issues relating to the SME sector in the context of slowdown in the Indian economy, he said, “Small enterprises have a significant role in terms of a balanced and sustainable growth of the economy by way of employment generation and contribution to export earnings.
This vibrant segment of the economy has been contributing over 39 per cent of the manufacturing output, 33 per cent of the national exports and providing employment to nearly 31.2 million people through 12.8 million units. The government of India and
Reserve Bank of India (RBI) have take a number of measures for the development of the sector.”
Currently, the SMEs are reeling under the pressure of economic slowdown and it is time for the banking sector to come to their rescue, he said.
In keeping with the policy guidelines issued by government of India and RBI, the banks have taken steps for
doubling of credit to this sector over the outstanding level as of March 2005 within a period of five years, ending March 2010. The outstanding level of advances to micro, small and medium enterprises in Karnataka have risen from Rs 9,278 crore as of September 2007 to Rs 15,270 crore as of September 2008, a growth of 64.58 per cent year-on-year basis, he said.
Further, Joseph said, the bank has cumulatively covered 9,689 accounts with a limit of Rs 532.23 crore under the guarantee scheme as of December 2008. Banks, government agencies, development institutions, medium and large industries also have a significant role to play towards development of SMEs and have requested for efforts by all concerned to support SME sector at this juncture to enable them to come out of the present crisis.
On the occasion, Shanthakumari Sundar, additional chief secretary and development commissioner, government of Karnataka said, small enterprises were the most affected by the economic slowdown. The state government was setting up another ‘industrial facilitation council’ which would deal with defaults by units to banks in Karnataka, she said.
Arvind N Burji, president, Karnataka Small Scale Industries Association (Kassia), demanded that a “tax holiday” be declared for SMEs for one year to deal with the crisis situation. J Crasta, senior vice-president, Federation of Karnataka Chambers of Commerce and Industry, said: “What we have seen so far is nothing. Worse is still to come.” He urged the banking sector to take measures to overcome the crisis immediately.
