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The micro and small enterprises in India have proved to be an engine of growth of the economy, with 39 per cent of India’s gross industrial production and a substantial proportion of its exports being generated by the segment. It is estimated that with over 11.8 million units in the country, the small scale sector provides employment to more than 28.1 million people. Recognising the importance of this employment-intensive segment of the economy, the National Common Minimum Programme (NCMP) of the Government has declared that the sector will be freed from Inspector Raj and given full credit, technological and marketing support.
The Small and Medium Enterprises Development (SMED) Bill, 2005 has been recently introduced in the Lok Sabha with a view, inter alia, to simplifying and harmonising the system of inspections applicable to small and medium enterprises (SMEs) under various existing laws. The Department-related Standing Committee of Parliament on Industry has examined this Bill in depth in consultation with the representatives of a large number of associations of micro/ tiny and small enterprises as well as senior officers of States and Union Territories. The Committee’s recommendations have been received and will be suitably incorporated in the SMED Bill, for consideration of Parliament. On enactment, this would be the first comprehensive legislation to facilitate the promotion and development of micro, small and medium enterprises in the country and to enhance their competitiveness, through a statutory framework of measures aimed at enabling these enterprises to continue to generate sustainable and productive employment and face the challenges of global competition successfully.
A package of policies/ measures for strengthening and enhancing support to the micro and small enterprises is another significant declaration in the NCMP. As a major step towards implementation of this declaration, the Government has just announced a policy package for stepping up credit to SMEs (including micro/ tiny enterprises). This package provides for doubling the flow of credit to these enterprises within five years and ensuring 20 per cent year-on-year growth while doing so. Various other areas of concern in the context of credit flow to the SMEs have also been adequately addressed in this policy package. The other package of policies/ measures in the areas of technological upgradation, marketing, etc., has been drafted and will be brought up for consideration of the Government soon.
Fulfilling another commitment in the NCMP, the Government has constituted the National Commission on Enterprises in the Unorganised Sector to examine the problems faced by such enterprises and make appropriate recommendations. The proposal of this Commission on taking up pilot projects for ‘growth poles’ applying the PURA (Provision of Urban Amenities in Rural Areas) principles has been included in the Budget Speech, 2005-06 for implementation in the current year. The National Manufacturing Competitiveness Council (NMCC) has also been constituted by the Government to recommend measures for enhancing the competitiveness of India’s manufacturing industries, SMEs in the main. The Council’s proposal to launch the “National Competitiveness Programme” is yet another important initiative for implementation during this year.
To help the micro and small enterprises improve their internal management and access institutional credit on more favourable terms, a scheme of Credit-cum-Performance Rating of small scale industry (SSI) units has been launched in April 2005. Under the scheme, 75 per cent of the fees charged by the participating rating agencies are reimbursed to the small scale industries. As a result of the joint initiative of the NMCC and the Ministry of Small Scale Industries, the Annual Policy Statement 2005-06 of the Reserve Bank of India (RBI) has announced a scheme to bring about strategic alliance between branches of the Small Industries Development Bank of India (SIDBI) and those of other commercial banks in 50 identified SSI clusters for co-financing of SSI term loan and working capital. Further, the RBI Policy Statement includes its decision to review all its existing guidelines on financing the small scale sector, debt restructuring, nursing of sick units, etc., with a view to rationalising, consolidating and liberalising them.
The Ministry of Small Scale Industries has also accelerated the pace of implementation of the existing schemes for assistance of small scale industries. Thus, for the first time since the commencement (1993-94) of the scheme of reimbursing 75 per cent of the cost incurred by SSI units in obtaining ISO 9000/14000 certification, over 3300 units have availed of the benefits of the scheme in a single year (2004-05). During the period May 2004- April 2005, the number of units (14,156) that have been provided guarantee cover under the Credit Guarantee Scheme for SSI is nearly equal to the total number of such units (14,324) covered during the entire period since the inception of this scheme (01 January 2001). The loan amount (Rs. 336.88 crore) for which credit guarantee has been extended during this period is also more than 50 per cent higher than the total amount (Rs. 220.29 crore) guaranteed during the preceding more than four years. The guarantee provided under this scheme has been widely welcomed by the financial institutions as well as the micro and small enterprises which find it generally difficult to access credit without collateral.
Similarly, under the Prime Minister’s Rozgar Yojana (PMRY) implemented by the Ministry of Agro and Rural Industries in collaboration with States and Union Territories, during 2004-05, the number of sanctioned applications has increased by 52 per cent (2,90,333), the amount disbursed by 59 per cent (Rs. 1103.13 crore) and the number of cases of loan disbursement by 56 per cent (1,82,165), over the corresponding figures for 2003-04. Further, 5.30 lakh additional job opportunities have been created in the rural areas of the country under the Rural Employment Generation Programme (REGP) during 2004-05, in line with the NCMP declaration on accelerated employment generation.
*Secretary, Ministry of Small Scale Industries and Agro & Rural Industries
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