New Delhi: Union Budget 2022-23 should include measures to support the Micro, Small & Medium Enterprises (MSMEs) sector and make access to capital simpler, AU Small Finance Bank Managing Director and Chief Executive Sanjay Agarwal has said.
The comments come as the sector has faced continued distress since the Covid-19 pandemic struck in March 2020. According to government data, about 9 per cent of MSMEs shut down due to the pandemic and crores of people lost their jobs.
Moreover, production in MSMEs fell from an average 75 per cent capacity to 13 per cent during the peak of the lockdown in May 2020, said a report in the Economic and Political Weekly published in June last year.
On average, businesses retained only 44 per cent of their workforce, the report said, adding that 69 per cent of firms reported that they didn’t think they could survive longer than three months.
While things picked up as the economy reopened, the second Covid wave gave another blow to the sector. In April and May 2021, nearly 60 per cent of the addition to non-performing assets (NPAs) came from MSMEs, compared to 30 to 40 per cent earlier.
Here’s the full text of the AU Small Finance Bank chief’s comments on the sector.
“The MSME sector is gradually recovering from the impact of the pandemic and needs continued hand-holding and policy support to take advantage of the opportunities provided by the evolving global supply chain dynamics.
“Given the strong employment generation potential of the MSME sector, my humble request is that the upcoming budget should include affirmative measures and schemes to support MSMEs and make access to capital for MSMEs simpler and seamless so that they can play a meaningful role in the ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives of the Government,” he said.