Amritsar, Aug 22 (KNN) Following the rise in repo rate by the Reserve Bank of India (RBI),the MSMEs in Amritsar are under undue stress due to rising inflation and interest rate hike.

The repo rate has been hiked by the RBI thrice by 0.4 per cent in May, 0.5 per cent in June and 0.5 per cent in August this year.

Speaking about the obstacles and challenges that Amritsar MSMEs are facing, Piara Lal Seth, president of the Punjab Pradesh Beopar Mandal (PPBM), said the Reserve Bank of India hiked the repo rate by 1.4 per cent in the last four months, upsetting their business calculations.

“The interest rate of advances taken by the MSMEs has become expensive, which is directly increasing input cost of products being rolled out of these units. The MSME sector was already passing through an existential crisis due to hike in raw material, fuel cost, cargo cost and other factors emanating out of the Covid-19 pandemic,” he said.

The rise in Food inflation in recent times has added more misery to the already stressed MSMEs.The paying capacity of the consumers has decreased significantly.

“The government’s argument that the repo rate was increased to prevent rising inflation was micro, which ignores the interests of the MSMEs. Hence, its negative impact on the economy would be visible in the coming days, Sunil Mehra of the PPBM said.

He further highlighted that the government should first take immediate cognizance of the MSME sector and announce a special relief to bail it out from the interest rate hike. It would pave the way for acceleration of industrial activities.

The trade body has urged the government to provide two per cent interest subsidy to the MSMEs offer some relief to the sector which offers maximum employment to industrial labourers.  (KNN Bureau)