Falling investment confidence is the greatest malaise in a recession, and fighting this is the first step in a contra-cyclical policy, according to a report on MSME (micro, small and medium enterprises) released in Mumbai last Saturday.

Quoting its experience with the ‘India MSME Darshan’, a massive MSME contact programme involving five lakh entrepreneurs from 20 centres across the country, Institute of Small Enterprises and Development (ISED), which brought out the 17 report in an annual series, said that the confidence level among the MSMEs was pretty low today. The ISED report has been making such warning signals since 2007.

The report, released by the Union MSME Secretary, Madhav Lal, said that MSMEs were emerging as the recession pain-killers of economic crisis, based on the experience of a number of countries, including Grece, Spain, Portugal, Luxumburg, and Italy. Even Germany, a country that is relatively well-off in Europe, supportsedMSME programmes in the badly affected countries, the report pointed out.

The Chinese MSMEs were becoming increasingly cost-competitive, and would prove a serious threat to MSMEs in India. In such circumstances, India needed to announce a special and sizeable relief package for MSMEs to counteract its possible effects and develop MSME confidence, the report said.

Post-recession adjustments were much quicker in the case of MSMEs than in the corporate sector. And, therefore, this was the right time for the Union Government to act, the report added.

More In: Industry | Business