Hello everyone....Bengol Mystery...
The great MSME mystery
Confused? The following guide may help you pick your way through the MSME minefield.
• The chief minister and the MSME principal secretary were not on the same page because while Mamata was talking about investments, the IAS officer mentioned loan advances to the sector.
• The chief minister talked about investments of over Rs 45,000 crore in MSMEs without mentioning the period during which the investments materialised.
Besides, the definition of MSMEs may offer some perspective. To qualify as
an MSME, the ceiling on investments in plant and machinery is Rs 10 crore for
medium, Rs 5 crore for small and Rs 25 lakh for micro enterprises. If
investments of over Rs 45,000 crore have been made, several thousands of units
need to come up. A good question to ask is whether such units have mushroomed
in Bengal in the recent past.• Some bankers said the credit flow to MSMEs in the past few years have averaged around Rs 10,000 crore with the flow crossing Rs 21,000 crore in 2013-14. Between April and September 2015, the credit flow to MSMEs was Rs 17,139 crore. The amount the secretary cited - Rs 91,000 crore - is the total credit issued between 2011 and 2015, not a single-year figure.
• The credit flow to MSMEs is good for the Bengal economy, but questions remain whether the state government can take credit for that. According to banking sources, most of the credit flows to the MSMEs in the form of priority sector lending by scheduled commercial banks. The RBI requires banks to lend 40 per cent of their total credit in a year to a cherry-picked set of beneficiaries that include farmers, small industry, exporters, students and small housing loan seekers.
• A senior banker added that banks have also lent to MSMEs beyond the priority sector lending thresholds. "In the past few years, owing to the lack of big-ticket credit demand, banks have lent to MSMEs in Bengal, where there are only a handful of large companies. Therefore, advances to MSMEs, besides retail credit, have gained importance," said an officer of a public sector bank.
• A big source of worry for the bankers is the low credit recovery in the MSME sector. The recovery figure as on September 2015 was 57 per cent, lower than the 59 per cent in the same period a year earlier. "The bankers usually have a regular request at any SLBC (state-level banking committee) meeting: the state government should provide administrative support in recovering loans, especially in the farm and MSME segments. While our voices are heard, the falling recovery rate shows the real picture," the bank officer added.
Chief minister Mamata Banerjee has said that although she "talks little and works a lot", she gives "fitting replies" to those who do not know how to work.
At the Red Road event this afternoon, the chief minister proceeded to reply to the Left charge that she had failed to industrialise the state.
"There have been investments of over Rs 45,000 crore in MSMEs (micro, small and medium enterprises). How is that not big?"
Mamata added: "Tell us, Rajiva, you are here. Tell us if I am wrong."
(Seated on the dais, Rajiva Sinha, principal secretary of the department, looks hesitant.)
Mamata (pointing to a microphone at the other end of the stage): "Go on, take the microphone, give us the figures."
Sinha (after walking up to the microphone): "Madam, loans to the tune of Rs 91,000 crore have been disbursed by banks to MSMEs."
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