This gives the Centre a huge opportunity to rejuvenate the rural economy through expansion and modernisation of the SMEs.

The first UPA regime was too much obsessed with formulating new policy measures for the big industries and allowing foreign direct investment in the key sectors of the economy. There was focus on the SMEs but it was not adequate. In fact, the big industries including those in the manufacturing sector did not combat the challenge of global slowdown despite getting a number of incentives. The SMEs is now the second largest employment-providing sector in the country after agriculture. And despite pressures from the global economy and the consequent slowdown in the domestic economy, the SME sector met this serious challenge without much loss of jobs.

The SMEs now need fresh measures from the government and the banks to encourage them to access new business owing to demand uncertainty. As per the ICICI Bank assessment, the growth opportunities in SMEs space are largely a function of demand and supply chain linkages directly or indirectly with large corporate government sector and retail consumers. Though there are signs of growth moderation, in certain sectors of the economy, the growth rates are still healthy. These include infrastructure, power, health care, education, engineering goods, telecom, information technology, transportation and logistics sector.

India is fast emerging as a global force in service and manufacturing sectors; therefore the SMEs policy framework along with fiscal and monetary measures plays a critical role to support the transition. The SME sector now wants the Government to work on a few immediate measures which should include broadbasing capital subsidy programme to incentivise modernisation of SMEs across multiple sectors and setting up of an SME exchange to provide liquidity and access to capital markets. There is also a proposal for promoting and channelising funding to SME-focused assets reconstruction companies and incentives to encourage more foreign angel/investors/private equity in SME sector.

One of the major problems faced by the SMEs relates to the non- availability of adequate financing and capital. The lack of information and high servicing costs are deterrents for most banks to extend credit to the SMEs. The growing sickness is another area where the government monitoring is needed. The agencies should start assistance before the sickness gets prolonged making the units economically unviable.

The Planning Commission, in its action programme for job generation, has mentioned the special role of the SMEs in creating new employment opportunities in both rural and urban areas. With the Government determined to make the economic policy employment-generation oriented, the future growth of the SMEs has assumed special importance; a slew of measures are expected to be announced in the 2009-10 budget to be presented in July this year by Finance Minister Pranab Mukherjee. (IPA)