FM scripts big role for small units

The current phase of consolidation in the economy, after a series of "structural reforms" initiated in the past two years, would be led by micro, small and medium enterprises (MSME), finance minister Arun Jaitley said here on Saturday.

By Our Special Correspondent
  • Published 4.02.18
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Arun Jaitley with other officials in New Delhi on Saturday. PTI

New Delhi: The current phase of consolidation in the economy, after a series of "structural reforms" initiated in the past two years, would be led by micro, small and medium enterprises (MSME), finance minister Arun Jaitley said here on Saturday.

"Having gone through a series of major structural reforms in the past two years, now (this) also is a phase for consolidation as far as the economy is concerned. And this phase of consolidation will be led by the MSME sector," he said after launching CriSidEx, the first sentiment index for small units, developed jointly by Crisil and Sidbi.

Jaitley further said the health of the sector was extremely vital and with a number of steps taken, there was an increased integration of the sector into the formal economy.

Pointing out that it is one of the largest employers, he said, "This is one sector where people not only exhibit their entrepreneurial skills and become part of large value chains but they also become job creators in the process."

That is the reason why the bulk of the jobs in manufacturing and trading have been created in this particular sector, the finance minister added.

He also said that in a country with a vast population, the scope for employment either in the government or in the large industry has a limited potential.

CriSidEx is based on a diffusion index of eight parameters and measures small businesses sentiment on a scale of 0 (extremely negative) to 200 (extremely positive).

This objective index will be of some use to individual companies but it will be of greater help to policymakers so that they can bring in the necessary changes and ensure that the government continues to perform its role as a facilitator.

"I see a great value in this index as much as in the series of the data, the series of sentiment, which will show, what are the challenges to that sector, what are the strengths of that sector, what is the cause of optimism, where is that the shoe pinches," he said.

Noting that small units generate most of the employment, economic affairs secretary S.C. Garg said if the firms get their online ID from Aadhaar as an enterprise ID, it will facilitate their process towards formalisation.

"It will also facilitate their ease of doing business. With one single enterprise ID, it is possible that 26-27 business registrations will not be required. And it will be possibly much easier to file their returns," Garg said.

Financial services secretary Rajiv Kumar said the launch of the index was very timely because the government has really enabled MSMEs in terms of credit needs and taxation relief in the last 4-5 months.

"In respect of Udyami Mitra, I would say it's a virtual platform now and 3,300 cases have been sanctioned Rs 750 crore in the last 4-5 months," Kumar said.

Udyami Mitra is an online portal to improve the accessibility of credit for the MSMEs.

The banks have been fully capitalised and their lending capacity has increased. It is really the right time that Udyami Mitra becomes effective, he said.