SOIL Report 2011 - ACCESS Development Services

70 State of India’s Livelihoods Report 2011Box 3.4: Major issues before MSMEsFinancial/taxation• Lack of availability of adequate andtimely credit• High cost of credit• Collateral requirements• Limited access to equity capital• Issues relating to taxation, both directand indirect, and procedures thereofMarketing• Problems in supply to government departmentsand agencies• Problems of storage, designing, packagingand product display• Lack of access to global marketsInfrastructure/technology/human resources• Inadequate infrastructure facilities, includingpower, water, roads and so on• Low technology levels and lack of accessto modern technology• Lack of skilled manpower for manufacturing,services, marketing and so on• Procurement of raw materials at a competitivecostInstitutional/legal• Multiplicity of labour laws and complicatedprocedures associated with complianceof such laws• Absence of a suitable mechanism whichenables the quick revival of viable sickenterprises and allows unviable entitiesto close down speedilySource: Compiled by author from a whole list ofproblems as identified and published in http://business.gov.in/enterprises/problems.phpNinety-four per cent of all such MSME enterpriseshave proprietary ownership, 95 percent of the units are running perennially,and women make up only 17 per cent ofthe workforce.In the past, several committees havelooked at the issues faced by MSMEs, andrecommended measures to the government,a key measure being the financial stimuluspackage (Government of India 1996;National Commission 2007; Reserve Bankof India 2004). Responding to the call of 19national level MSME associations, the PrimeMinister formed a TF in August 2009 to lookinto the issues of MSMEs, and recommendimmediate measures, to resolve these issues,to the government.The issues identified by the Committeeare shown in Box 3.4; these can be classifiedinto four broad groups:1. Finance/taxation2. Market access3. Infrastructure/technology/HRs4. Institutional/legalThe recommendations made by the TFalso fall under these categories. The mainfeatures of the recommendations are discussedbelow.Finance/taxation:1. Stimulus package should continue forone more year. 62. Creation of an Exclusive Risk CapitalFund of ` 2,000 crore within SmallIndustries Development Bank of India(SIDBI) to cater to MSMEs.3. Additional budget support of `3,000 to5,000 crore over five years to supportinfrastructure upgrades.4. States to be supported in funding therehabilitation of MSMEs.5. Commercial banks to adhere to thetarget of 20 per cent of their lending toMSMEs, out of which 60 per cent mustbe apportioned for micro-sectors.6Stimulus Package for MSMEs refers to four financialstimulus packages announced by GOI on 7.12.2008,2.1.2009, 24.2.2009 and 26.2.2009. This refers to a seriesof measures starting to reducing Cenvat, to supportmeasures in exports, easing import restrictions, andduties, provision of working capital and sector-specificmeasures for textiles, leather, housing and so on. Fora complete picture of all the stimulus packages, seewww.rajind.rajasthan.gov.in/Stimulus_Packages.pdfthat compiles all of them together.