Union Finance Minister Nirmala Sitharaman, in her maiden budget, announced a slew of measures for micro, small and medium enterprises (MSME) sector and self-help groups.
Tamil Nadu has one of the largest numbers of MSMEs and self help groups and the announcements are likely to help them. The budget allocated ₹350 crore, for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans, and creation of payment platform for MSMEs to enable filing of bills and payment from government without any delay. Also, the lower tax rate of 25% would be applicable to companies having an annual turnover up to ₹400 crore.
Tamil Nadu has over 17.20 lakh registered Micro, Small and Medium Enterprises (MSME) units. The sector has been hit due to the Chennai floods in 2015, Cyclone Vardah and measures like demonetisation and GST. K.V. Kanakambaram, president of the Industrial Estate Manufacturer’s Association, welcomed the ₹350 crore allocation to the sector.
“In continuation to bolstering MSME growth, interest subvention of 2% is announced for fresh or incremental loans. This keeps the supply chain intact and registered assessees get additional buoyancy in this sector,” he added.
But many small industrialists in this sector said firms who lost their documents during the floods are not able to get loans even from banks with whom they have had a long term relationship. So how can they get loans from the Centre, they asked.
Self help groups are likely to get a boost from the announcement that one woman in every self help group will be eligible for a loan of up to ₹1 lakh under the Mudra scheme. Further, the announcement that a verified women self help group member having a Jan Dhan Bank account will be allowed an overdraft of ₹5000 is also likely to ease availability of credit.
According to an internal survey by Tamil Nadu Corporation for Development of Women, the demand for SHG Bank Linkage Programme (BLP) is ₹25,000 crore, whereas loans available to SHGs from the formal banking system were stagnating at ₹6000 crore continuously for 3 years till 2016-17. It touched ₹11,363.33 crore in fiscal 2019, for the first time, but below the target of ₹15,000 crore.
There are about 3.15 lakh self help groups in the State and over 80,000 self help groups are not functioning well due to non-availability of credit and other factors. However, according to a senior government official, corrective actions are being taken.
