The Hindu Business Line : ‘Specialised financial institution needed for unorganised sector’

Organised meet: Dr Arjun Sengupta, Chairman of the National Commission for Enterprises in Unorganised Sector, with Mr Ananthakrishna, Chairman of Karnataka Bank, at a meeting in Mangalore.

Our Bureau

Mangalore, Feb. 19 There is need for specialised financial institutions for the welfare of the unorganised sector, according to Dr Arjun K. Sengupta, Chairman of the National Commission for Enterprises in the Unorganised Sector.

Delivering the Founders’ Day lecture at Karnataka Bank Ltd here, Dr Sengupta said that unorganised enterprises have around 58 million units that come under small and tiny enterprises sector. These 58 million units contribute to around 30 to 31 per cent of the GDP. However, they constitute around 4 per cent of the gross bank credit. Of this, unorganised enterprises with less than Rs 5 lakh capital get 2 per cent of the gross bank credit.

Stating that there is a need to provide around 20 per cent of the credit to unorganised enterprises, he said in such a situation specialised financial institutions, on the lines of NABARD, can be thought of.

Suggesting the need for the creation of the National Fund for Unorganised Sector (NAFUS), he said banks should earmark around 20 per cent of their lending to NAFUS.

Additional incentives can be thought of for banks for this contribution. Only by creating incentive system, such a system can survive, he said.

Average salary

Nearly 77 per cent of the Indian population (amounting to around 836 million) is in the unorganised sector with an average salary of below Rs 20 a day. Only 23 per cent of the population (amounting to around 254 million) have purchasing power. There is a total divide in the country. Efforts should be made to bring this 77 per cent of the population into the mainstream of economic development, he said.

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