March 19, 2020
Dola Sen speaks on the working of the Ministry of Micro, Small and Medium Enterprises
FULL TRANSCRIPT
Honourable Chairman Madam, today, you have allowed a discussion on the working of the Ministry of Micro, Small and Medium Enterprises. A few days ago, you were very kind, Sir. You allowed a discussion on the Railway Ministry as well. That discussion was initiated by my party the All India Trinamool Congress.
We asked 7 questions to the Railway Minister. We got a speech but no answers. So today, Sir, I request the Minister, in his reply to please answer the questions which the MPs are asking. And from the last July session 2019, till date, almost in every sessions several times our party, the All India Trinamool Congress was asking definete questions regarding disinvestment of Public Sector Undertakings, Public Enterprises, Corporatisation of Defence Sector, 100%FDI of Coal Sector and non-payment of wages and salaries for the last 10 months towards the contractual employees of BSNL and the permanent employees of Hindustan Copper Corporation, too. In these cases also no answer . Today again, Sir, I request the Ministers and the policy makers of the Central Government please answer our questions so that the people of India may get their answers.
To understand the working of the Ministry of MSME, we have to understand what action hurt the MSME sector so much. Who is responsible and why is it so? It is the Prime Minister himself who is responsible. Sorry to say, but it is the truth because it was he who announced demonetisation in November 2016. That was a big blunder.
Now come to the second blunder which has hurt the MSMEs.
In July 2017, the Goods and Services Tax (GST) was introduced in the country. We had supported the move, but strongly opposed on how it was implemented.
The faulty implementation of the GST and the faulty policy of demonetisation resulted in a loss of Rs 4.75 lakh crore to the country’s economy.
But you don’t want to take advice. You think you can do it all. You do not need anybody’s advice. And you are insulting the Parliament. Sorry Sir, but the Lok Sabha and Rajya Sabha are in session, and instead of addressing the Parliament and the nation, you are avoiding Parliament and doing a TV address.
Now, let me not give you a theoretical lecture on how progress has been made, and come to the practical scenario.
- The MSME sector in Bengal is flourishing
West Bengal is a leading State in the MSME sector. As per the NSS report of the Central Government, the State has 89 lakh MSME establishments. During the last 8 years, the number of MSME Clusters in operation in Bengal has grown. How has it grown? From 49 to 539. Wow, 49 TO 539!
That is why we say, ‘Banglar Gorbo Mamata’. Which means ‘Bengal’s Pride is Mamata’. And Bengal’s pride is also MSME, also the agriculture, the organic farming, social security for the kishan, khetmajur, bargadar. Bengal’s pride is also the ‘Samajik Mukti Prakalpa’ for the unorganised workers. Bengal’s pride is also the ‘Joy Bangla’ for the SC/ST senior citizens. Bengal’s pride is also Kanyashree, Bengal’s pride is also ‘Utkarsha Bangla’ and obviously Bengal’s pride is Mamata, ‘Banglar Gorbo Mamata’.
Rs 2.4 lakh crore have been invested in SMEs through co-operative and commercial banks in my State.
The infrastructure for small industries has also seen tremendous growth. At present, 52 MSME Parks are operating. 39 more such MSME Parks are under construction in my State.
To further attract MSME investment in the State, 100 new MSME Parks are being established in the next 3 years.
The quantum of bank credit is a good parameter to judge how a State is doing in the MSME sector. The more the banks give to MSMEs, the better the State is doing.
In the last 2 years, the growth of bank credit has been unprecedented. In 2018-19, it was Rs 57,000 crore.This is almost 30% higher than the credit in 2017-18.
Yes, West Bengal is India’s number one state in MSME. In 2019-20, the credit flow to this sector already reached Rs 35,000 crore during the first two quarters of 2019. This meant a huge jump of 75% on a year-on-year basis for the same period last year.
We are proud of this achievement. The Bengal Government has also introduced a new incentive scheme for the MSME sector, named ‘Banglashree’ which starts next month.
The State Government is taking all these initiatives even though the Centre owes the State of West Bengal about Rs 50,000 crore. The Centre also owes the States thousands of crores on GST. And the Centre also owes the state of West Bengal thousands of crores on every other public scheme and Government scheme.
This Government has got MSMEs into trouble. Madam, allow me one minute to tell you about this Government’s ‘Becho India’ programme. They are selling everything, including LIC, BPCL, Shipping Corporation of India, Container Corporation of India, Indian Railways,Air India, ECL, Bridge and Roof, Bengal Chemical, Indian Oil Corporation, Chittaranjan Locomotive Works, Alloy Steel Plant and etc. At least after this coronavirus, and the great job done by Air India, I appeal to them to not sell the pride of the nation, Air India. Air India has stood by the nation in this crisis, Madam. We salute the Air India family and we must not sell this national treasure and the other Public Sector also, those who are national treasures and we must not sell them.
- Financial crisis in the MSME sector
Sir, only 15% of the MSMEs in India receive formal credit. More than 80% of them are under-financed or financed through informal sources.
The World Bank estimates the credit gap for India’s MSMEs to be at around Rs 25 lakh crore.
If the sector is not financed effectively, how will it empower the industry to grow? We need to bridge the credit gap urgently to ensure that the MSMEs are well funded and their operations are not at stake due to a lack of funds.
- Delay in repayments
A low demand, non-payment by customers, and banks not restructuring loans of MSMEs is affecting the sector.
It is to be noted that repayments have been delayed by more than a month, sometimes up to 4 months. Banks are tagging such loans as Non-Performing Assets as mandated.
If this happens, then it becomes difficult for the MSMEs to access further funds. The Government has to consider this and ensure that proper checks are in place which empower the MSMEs to grow and not remain in the red.
Again, financials are the key fuel which allows the nourishment of the MSMEs. There has to be no impediments to access finance, as also policy intervention is required to make sure that the MSMEs are paid by their customers on time for them to service their loans as well.
Also, leeway provisions have to be strengthened for MSMEs to not suffer should they fail to pay their loans back in time.
- Negative credit growth
The credit growth for the MSME sector is muted.
According to data from the Reserve Bank of India, for the micro and small segment, the credit growth has been negative at -3.4%, between April-November 2019. For medium enterprises it was negative at -3.6%.
On a year-on-year basis too, credit growth till November 2019 in both micro and small, as well as medium enterprises has been negative at -0.1% and -2.4% respectively.
- Huge quantity of loans being restructured
In January 2019, the RBI had allowed a one-time restructuring of existing MSME loans that have defaulted, but weren’t non-performing as on January 1.
The original deadline of 31 March 2020 was extended by a year to 31 March 2021 in the recent Union Budget.
According to banks, MSME loans of about Rs 2 trillion were identified to be restructured by 31 March 2020. Banks hope to meet at least 70% of this target.
Why is the MSME sector suffering that a majority of the loans have to be restructured? The Government has to find the root cause of this and ensure that such organisations are not grappling with issues that are making it difficult for them to run.
- The budgetary allocation is not enough
The budgetary allocation for the MSME sector increased from Rs 7,011 crore in 2019-20 to Rs 7,572.20 crore in 2020-21. Only by around Rs 500 crore!
The Ministry had reportedly sought Rs 12,000 crore. In such a scenario, has the Government assessed the lag in funding for the sector as a whole? Is the budgetary allocation of the sector enough or is the Government going bankrupt to not be able to provide the needed funds for the sector?
- There is a policy gap regarding agro-based industries in MSME sector on behalf of the Central Government
India is an agrarian country. So India has an ample scope in agro based industries and agro-based industries are obviously in MSME sector. We have lot’s to produce like potato chips, food-processing, jute, cotton, tea etc and can flourish MSME sector by developing such agro-based industries. But unfortunately Central Government has no definite and constructive policy for the development of agro-based industries in our country as well the MSME sector
The importance of the MSME sector
Now let me come to the importance of the MSME sector to the country, which is already flourishing in Bengal.
The MSME sector in India is key to the growth of the country’s economy. Around 75 million MSMEs contribute to about a third of the GDP and 45% of the manufacturing output of the country. These companies also provide employment to more than 110 million people of our country.
But the sector has been facing issues that need correction and holistic policy intervention.
Let’s follow at least a bit from Bengal’s model of MSME and let us work together for India.
Now with the outbreak of coronavirus, the industry is set to make further losses and see job losses as well.Considering the impact of the virus on the economy of the country, consumption and demand will decrease, hampering the economy as a whole.
Overall, I would urge the Government to pay heed to the demands of the MSME sector and ensure that it is well-funded, its operations are streamlined, it has proper access to finance, its payments are made on time, and it functions in an environment of economic progress and not lag.
Bengal is number one in the nation in MSME. And let us work together to make India the number one MSME country in the world.
At the end, Honourable Mr Prime Minister you are addressing the nation at 8 PM tonight on coronavirus. Good, we are looking forward to it. But please do come to the Parliament and address the Parliament regarding everything, regarding coronavirus, regarding MSME, regarding our development of the country. Do come to our House also, do come to Parliament, do come to Rajya Sabha.
Thank you, Madam.
