The Hindu Business Line : SMEs urged to help protect rural areas in crunch time

Kochi, Dec. 9 The economic slowdown will become a growth stimulant for the SME sector in the country due to input cost reduction and easy availability of workforce, Mr R.S. Mooshahary, Governor of Meghalaya, said.

Delivering a lecture at the third Southern Regional Conclave-2008 organised by Kerala Management Association in collaboration with Madras Management Association and Konrad Adenauer Foundation here on Tuesday, he said that the small-scale enterprises could lead in the generation of rural business hubs through the concept of Public-Private Panchayat Partnership, which the Ministry of Panchayati Raj is keen on promoting. The rural entrepreneurial awareness through its presence in the rural areas of the country will energise the youth to step forward in self reliance, he said.

Rural boost

Mr Mooshahary pointed out that micro, small and medium enterprises are the lifeblood of rural economy and the entrepreneurs must be able to establish linkages among them to avoid large-scale migration.

He said that SMEs had created 20 million jobs, which is the highest employment sector next only to agriculture. SMEs’ range of products exceeding 8,000 is ample proof that these enterprises are doing a huge job in providing employment, consumer items, capital and intermediate goods.

SMEs constitute over 90 per cent of the industrial units in the country and more than 40 per cent of the industrial output. In export terms, the SME share is about 45 per cent.

Finance crunch

Quoting statistics from Small Medium Enterprise Rating, he said the sector lacks free access to finance which, coupled with low capital base, is hindering progress. SMEs still rely on informal credit as only 14.15 per cent was provided by the formal lending sector — out of the total Rs 1 lakh crore investment made by the sector last year, he said.

Lack of modern technology and modern management practices in the industry are also retarding its growth from becoming efficient economic engines, the Governor added. However, banks and other private equity funds are now coming forward to provide finance to the sector. This could open new opportunities to procure finance at more liberal terms and conditions, he said.

Mr Mooshahary also stressed the need to create millions of workplaces in rural and semi-urban areas where unemployed youth can find avenues to grow. This will be the growth where poor will not become poorer but will better both economically and socially, he added.

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