With reference to the editorial “Helping MSMEs”(July 8), an important statement in it is “access to low cost finance and problem of locked up working capital remain an endemic concern”. MSMEs find it difficult to tap the capital market through IPOs and access bank loans.

Continuous monitoring of the sector is a must given the magnitude of problems it faces. The sector’s growth is vital for creating jobs. As the Editorial rightly points out “MSMEs in high tech areas need a set up that takes their mind off other managerial headaches”.

TR Anandan


While banks and non-banking financial companies are the main suppliers of credit to MSMEs, it is imperative to rejuvenate the suppliers to ensure the uninterrupted flow of credit to MSMEs. Financing the fixed assets with a nominal contribution and relaxed payback period in consonance with the cash inflows are needed to avoid defaults and to keep the MSMEs financially sound.

The long realisation period of the receivables in the working capital cycle needs flexible working capital finance too.

Lenders have to create and tune the lendings to the MSMEs in such a way to ensure that the credit input is adequate in running the economic activities of the enterprise.

While a number of micro-enterprises are borrowing from the NBFCs, it is essential to keep those lenders stress free to enable them to continue lending.

The proposed capital infusion of the public sector banks will ease the flow of funding to the NBFCs, and consequently to the MSMEs. Incentivising MSMEs is essential to push the exports as well as to create more job opportunities. Despite the priority sector status, credit flow to the MSME sector from banks are dismal, particularly in the case of the micro units. A strong credit guarantee system to guarantee the lending to the MSME sector is needed to dispense with the system of taking the collateral by the lenders.

At any of point of time, the asset created out of the bank credit must be of good quality and of sufficient value to ensure the mandated use of the bank credit and to continue it as security against the funding.

VSK Pillai



Air India disinvestment

This is with reference to ‘Centre will re-initiate Air India disinvestment by early next month’ (July 8). The government sounds highly optimistic this time around.

While, as revealed in this report, Air India Specific Alternative Mechanism (AISAM) will take the final call, but the ultimate success of the government’s latest move remains to be seen.

Anyway, our best wishes are always with the government as the nation can no longer afford to provide unlimited financial oxygen to this excessively debt-ridden airline.

So, let us hope that ‘lady luck’ finally smiles on the government of the day.

Kumar Gupt


Opportunity in gold

With reference “Mature Budget, but with grey areas” (July 8), though the writer has covered a wide range of aspects relating to investment and growth relevant in the context of “Target $5 trillion economy”, perhaps consciously, a reference to the huge untapped domestic resources, has been avoided.

The time is opportune to mainstream and monetise part of the domestic gold stock lying idle with individuals and institutions.

Similarly, the economic potential in real estate in the form of land and buildings in Indian cities owned by Central and state governments is huge.

There is no denying that the two categories of assets mentioned here are linked to people’s emotions and the nation’s heritage. Still, one feels, some sacrifices, here and there, are worth considering, if that will save the nation from permanent indebtedness and put India on the right growth path.

MG Warrier


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