The Growth Story- is there anything to Cheer Up MSMEs?
New Delhi, June 11 (KNN) The growth rate of GDP of nearly 7.7% during the last quarter of financial year 2017-18 is being widely acclaimed as an indication for resurgence of economy.
The growth rate for the quarter pulled up the lacklustre performances of the Indian economy during the previous quarters, is being shown as an indicator to 7% plus growth of the economy during the current; election year.
But does this growth rate project an equally optimistic environment for the MSMEs. Will it help the sector to overcome the triple whammy of GST, credit squeeze and enormous overdues from the corporates including PSUs; besides overcoming the virulent crosswinds in the export markets?
The break up of the quarterly GDP data shows more than 9% growth in the manufacturing sector as a whole during the last quarter against a negative growth during April – June 2017 quarter, which should reflect a real upturn in the manufacturing including the MSMEs.
However a fine print in the Government release says, the manufacturing figure does not have real data from the MSMEs.
“The quasi corporate and unorganized segment (which includes individual proprietorship and partnerships and Khadi & Village Industries having a share of around 21 percent in the manufacturing sector) has been estimated using IIP of manufacturing. The IIP of manufacturing registered a growth rate of 4.5percent during 2017-18”.
So for the sector which contributes around 21% to the total manufacturing; output the growth figures has been extrapolated.
According to the MSME leaders MSMEs contribute nearly 50% to manufacturing output and employ more than 90% of the total output and the Government has no mechanism to capture the real state of the sector!!
Commenting on the data gap, Dinesh Singhal, past President of FISME expressed that this is of serious concern and the Government should take initiative for capturing real status of the MSME sector. “The real growth story of MSMEs will come out only when the real data on the sector is published’, opined Singhal.
The IIP or Index of Industrial Production, another set of data, captured by the Government statisticians has an altogether different story to tell..
During the year 2017-18 the IIP has recorded a growth rate of 4.3 %. But the sectorwise data shows that sectors dominated by the MSMEs has recorded negative or stagnant growth.
The Ready made garments sector shown a negative growth of -10%, Leather Goods just 1.3%. Rubber and plastic products another activity dominated by the MSMEs also shown a negative growth.
V K Agarwal, another Past president of FISME and an industry leader also expressed his anguish over the lackadaisical approach of the Government to the MSME sector. “ MSMEs contribute nearly 10% to the GDP and is the largest employer of skilled labour, Government must have accurate information about the sector to formulate right policy for further impetus”, opined Agarwal.
So how far it is correct to assume the overall growth of Industrial Index, which is dominated by the metal, automobile Pharma industry etc., mainly in the large sector, as the reflexion of MSME growth, is a moot question..
The doubt is further strengthened by the RBI data on credit offtake by MSMEs where the outstanding credit is stagnant for quite sometime.
If MSMEs are not taking, rather getting, additional loans, how they are growing as bank credit is the only external finance available to MSMEs. (KNN/ DB)