Poor Credit Flow to Medium Enterprises Hits MSME Growth

Published: 29th October 2014 06:03 AM  |   Last Updated: 29th October 2014 06:03 AM   |  A+A-

BHUBANESWAR: Even as micro and small enterprises in the State are looking up, the medium enterprise sector is on a downslide. Credit flow to the vital sector has registered a decline of 23.5 per cent to `2,616 crore with number of accounts coming down sharply by 66 per cent during 2013-14. While micro and small enterprises have posted an increase of 29.2 per cent from `13,789 crore to `17,819 crore against an all India growth of 23.1 per cent, the fall in medium enterprises has hindered overall growth of Micro, Small and Medium Enterprises (MSME) sector in the State, Chief General Manager of SBI Bhubaneswar KM Trivedi said here on Tuesday.

Speaking at MSME Summit-cum-Expo 2014, organised by Indian Chamber of Commerce, Trivedi attributed the decline to unrealistic projections in project reports, unrelated expansion and excess capacity creation. There is a serious lack of fiscal discipline. Funds have been diverted for consumption processes, buying property or assets unrelated to core activity and lack of re-infusion of profits into ventures have adversely affected growth of the sector and led to closure of many units in the State.

“The success rate of rehabilitation is not encouraging while share of Non Performing Assets (NPAs) in MSME sector is also a matter of concern. These areas need immediate attention of all stakeholders”, he emphasised.

The MSMEs need special attention as they are the most critical engine to drive economy. More than 95 per cent of industrial units belong to the sector, which accounts for about 45 per cent of industrial output. Besides, it is the largest employment generator. MSME sector contributes eight per cent of the GDP and if nurtured properly may reach 15 per cent surpassing Agriculture’s contribution.

Chief Secretary GC Pati called for more professional functioning of the MSMEs to propel growth. They should be mentored and guided by large industries, he said. “The Government has taken various steps for strengthening MSME sector. Banks should come forward to work more closely with entrepreneurs to make the units successful,” MSME secretary Panchanan Das said. Among others chairman of ICC Vishal Agarwal was present.

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