While praising the MSME sector during his address to the joint session of the Parliament of India, the President said that the sector have a critical role in India’s prosperity. He also said that our MSMEs have been the backbone of our economy, and driver of Atmanirbhar Bharat. In order to protect MSMEs form crisis and ensure adequate availability of credit during the Corona period, the government started a scheme of guaranteed Collateral Free Loans of Rs 3 lakh crore. His address has very soothing effect on the audience until he revealed the shocking fact, “It is evident from the recent studies that this scheme has given a fresh lease of life to 13 lakh 50 thousand MSME units…”

It was shocking for those who knows the number of MSMEs in the country. India Brand Equity Foundation (IBEF) has said that India has approximately 6.3 crore MSMEs as per data from the MSME Ministry, as of November 26, 2021. The Udyam Registration portal registered 5,767,734 MSMEs replacing the former process of filing for an Udyog Aadhar Memorandum.

How dismal the Modi government performance was self evident from the President’s address that only 13.5 lakh MSME units were “given a fresh lease of life out of 6.3 crore of them. That too after the scheme was announced in May 2020. It is clear that only a handful of MSMEs could access the announced Rs 3 lakh crore support. There have been many national and international reports telling us that millions of MSMEs have died, million others are struggling to survive, and millions among the struggling, not many are still viable. World Bank has a programme for India to support still viable MSME units.

President’s address did not throw light on what happened to the majority of MSMEs beyond 13.5 lakh that got fresh lease of life. President said that in June 2021, the government has enhanced credit guarantee from Rupees 3 lakh crore to Rupees 4.5 lakh croe. It was just a mockery since the government had still not given the full announced amount of Rs 3 lakh crore support. Modi government could not even sanction the full amount as on November 26, 2021, what to talk about actual disbursal of the money. Sanctioned amount by that time was 2.97 lakh crore. In this backdrop the announcement of additional 1.5 lakh crore in June 2021 was just meaningless.

Several policy decisions have also been taken to expand the scope and opportunities for the MSME sector, the President has said. He also said that the new definition of MSMEs was helping small industries to expand. However, it is partially true, since the definition brought in bigger enterprises into the fold of MSMEs which cut their share that would have been otherwise the smaller ones. In this way large amount of the announced support went to newly brought in bigger enterprises than the erstwhile smaller and medium enterprises according to the old definitions.

President’s address should also be noted especially in the matter of wholesale and retail traders, as well as street vendors to get themselves registered on the Udyam portal so that they can avail benefits of Priority Sector Lending. It will just help the Modi government to show very large number of MSMEs in the country than the actual numbers, which had already died and struggling to survive but the government does not want to talk about.

Now let us come to what the Union Finance Minister Nirmala Sitharaman said in her budget speech. He speech in the Parliament informed different thing. She said, “Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs.” It was almost ten times more that the president has said. Was it deliberately misleading the parliament or something else? There must be something fishy about the data.

Even when what she said was correct, only 130 lakh is much less than 6.3 crore MSMEs in the country. Moreover, Modi government could not even get all the MSMEs registered on the Udyam Registration portal but merely little over 57 lakh and hence replacement of the former process of filing for an Udyog Aadhar Memorandum could take years. If simple registration is not possible under Modi Raj how can they have easy access to official finance?

In this backdrop every announcement could be seen with doubt. Finance Minister has said that Udyam, e-shram, NCS, and ASSEEM portals will be interlinked. Their scope will be widened. They will now perform as portals with live, organic database, providing G2C, B2C, and B2B services. These services will relate to credit facilitation, skilling, and recruitment with an aim to further formalize the economy and enhance entrepreneurial opportunities for all. Hearing such thing bring cheer on the face of the unsuspecting common people but will it not further delay “credit facilitation, skilling, and recruitment” at least until all portals are interlinked which people still find them complicated even in their present state that is hampering even simple registration?

Not a single rupee from ECLGS of 1.5 lakh crore announced in the financial year 2021-22 has been even sanctioned, and it is not likely to be done in the current year, what to talk about actual disbursal of loans to the struggling MSMEs. Therefore brazenly boasting to extend it up to March 2023 is like rubbing salt to the injuries of the MSMEs. Was it not then meaningless on the reality check when the country and the parliament heard our Finance Minister saying that its guarantee cover will be extended by Rs 50,000 crore to total cover of Rs 5 lakh crore? It is obvious, by the time the promised help would reach MSMEs, millions of they would already die, and million other’s condition would deteriorate beyond recovery.

Finance Minister further said that the hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business. Considering these … guarantee cover will be extended … with the additional amount being earmarked exclusively for the hospitality and related enterprises. However, this could materialize only when market is fully opened and uncertainties and disruption due to COVID-19 wanes substantially.

Until now, the functioning of the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme was so unsatisfactory that the Finance Minister should be welcomed for her announcement of revamping with required infusion of funds. However, she should must answer why under her leadership the functioning remained so disappointing will insufficient fund? And what is the Guarantee that her new mechanism would perform well while numerous other have been detrimental to growth of MSMEs in the country that began with Modi’s announcement of demonetization in November 2016?

Raising and Accelerating MSME Performance (RAMP) programme will have and outlay of Rs 6000 crore over next 5 years. Finance Minister said that this would help the MSME sector become more resilient, competitive, and efficient. However, the question is how many of them would survive for five years to see this happening? It would not be too much to comment that MSMEs of the countries have been systematically sabotaged in favour of the big domestic and foreign companies by numerous policies and policy experiments including deregulation, not providing official financial access, demonetization, non-development of market linkages and so on, despite the fact that MSMEs have been employing about 11 crore people, constituting nearly 40 per cent of exports and more than half of them located in rural areas and contributing about 30 per cent to India’s GDP. It is shame on Modi government that 9 out of 10 MSMEs still depend on informal sources, mostly unsecured loans, for their working capital and term loans as the study NIRDPR, 2021 reveals. Budget 2022-23 utterly insufficient to revive the MSME sector. (IPA Service)