Government support - are SMEs a neglected lot?

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Bikky Khosla | 07 Dec, 2010
It's not surprising that more than half of Indian small and medium enterprises (SMEs) feel that they are overlooked by the government when it comes to supporting them. The recent survey by Regus revealed that 56 percent of SMEs âfeel that the government is antagonistic towards their interest' despite the fact that the sector accounts for almost 45 percent of the country's industrial output.

It is really sad that a sector which employs more than 60 million people and which is expected to produce 22 percent of the economy by the end of this calendar year feels neglected. I, however, do not blame them; lending to SMEs is hard to come by and government venture capital funds are not being made available to support entrepreneurs and their businesses.

Surprisingly enough, the government recently has said that SMEs should change their subsidy-driven mentality and emphasize more on innovation and sustainable business model for growth. Although it is true and I agree completely that if SMEs do not shed their government-dependent mindset they will not be able to do well for themselves, the government will, however, have to support them in surviving the credit crunch that they go through most times.

Despite the fact that the government, the Reserve Bank of India and PSU banks have taken a number of steps like extending the loan limit under the Credit Guarantee Scheme, increasing guarantee cover, creating an advisory to central public sector enterprises and ensuring prompt payment of bills and reducing interest rates, the implementation and the benefits reaped by the sector is far below anyone's satisfaction. I believe that these schemes and support have not worked too well for the sector and they are still having difficulties securing capital and maintaining cash flow.

While the sector struggles to get its voice heard, it has put up a brave face in keeping aside all hurdles and emerging as the sector which is ready to invest in manpower ahead of its global counterparts. This trend goes to show that the sector is bullish on economic growth. A little support from the government will probably do a world of good here...agreed?