Bengaluru: The micro, small and medium industries (MSME) sector wants the Union government to come up with remedial measures in the Budget. MSMEs have been one of the worst-hit by the demonetisation move as most firms use cash to do business.

They now want the government to compensate them with measures such as reduction in lending rates, increase in the limit for collateral-free loans, lower tax rates etc.

“Our man expectation from the Budget is reduction in lending rates. We want a reduction of at least two to three per cent in interest rates for MSMEs. We are still recovering from the impact of note ban. There is also a need for the banks to go easy on term repayment of loans at least for another six months, failing which several of SME accounts would become NPAs (non-performing assets),” said A Padmanabha, President of Karnataka Small Scale Industries Association, stressing that the Budget is going to impact MSMEs in a big way this time.

As banks are flush with funds after note ban, small and medium entrepreneurs want part of that money to be deployed in the MSME sector to propel growth.

“India’s GDP will decrease this financial year due to demonetisation. The finance minister needs to channelise the cash in banks into the economy in a way which will propel growth and compensate for the losses during demonetisation. By ensuring that funds are made available to the MSME sector at lower interest rates, production activity will pick up, new jobs will be created and consumption increases, as the MSME sector is the largest creator of jobs,” said Ravindra Modi, President, Federation of Telangana and Andhra Pradesh Chambers of Commerce and Industry (FTAPCCI).

While banks have lowered interest rates on loans, representatives of the MSME sector say the benefits are yet to reach them.

“Prime Minister Narendra Modi announced some relief measures for the MSME sector during his new year speech. Though we welcome them, they are not sufficient, as the MSME sector needs much more than lip service from the government The government should walk the talk by providing concrete measures to the MSME sector in this Budget, failing which the sector will be badly affected and many units will become defunct,” stated P K Jain, chairman of the SME Council, Assocham.

Source: New Indian Express