Mumbai: The Micro, Small and Medium Enterprises (MSMEs) sector, which the Narendra Modi-led Government is trying to push as one of the major drivers of India’s economy had very little to cheer in Tuesday’s fifth bi-monthly monetary policy statement of the Reserve Bank of India (RBI).

The fund-starved sector has for long been clamouring for easier availability of funds at lower interest rates. It has suffered from not being able to access easy credit at economical rates and this is one of the prime reasons for the sector not being able to pull its weight as its potential warrants.

The Reserve Bank of India, which had kept the key rates unchanged in today’s policy review, had slashed its repo rate by an unexpectedly high 0.50 per cent in end-September from 7.25 per cent to 6.75 per cent in a bid to push down interest rates, make credit-availability easier and thereby spur economic growth. India’s apex bank’s efforts to rein-in inflation seems to have succeeded and the country’s GDP growth is projected at 7.4 per cent for this fiscal (FY 16).

This is very encouraging news indeed but if the MSME sector is provided a leg-up in terms of easier credit at lower rates, then not only will this sector which has the potential for tremendous employment-generation fare well but will also help in accelerating the country’s economic growth. India’s Prime Minister Narendra Modi’s `Make in India’ initiative stands to gain immensely if the MSME sector does well.

The importance of the MSME sector to India’s economy should be seen in the context of its contribution to the country’s GDP at nearly eight per cent. According to experts, with Government support and appropriate initiatives this sector’s contribution to India’s GDP can be pushed-up to double figures, maybe to around 11-12 per cent.

A point that needs highlighting here is that this sector contributes around 45 per cent of the country’s industrial output besides accounting for 40 per cent of India’s total exports. The sector is the second highest employer providing employment to around 10-crore people which is next only to agriculture. If this sector takes-off, much of the unemployment problems can be resolved. MSMEs offer a tremendous scope for providing employment to women as well which can help lower-income households boost their incomes, thereby increasing consumption and demand, which in turn will help the country’s economy move forward.

Unfortunately, it has been found that bank credit to this sector is neither sufficient nor do MSMEs find it easy to access credit from banks. According to the Reserve Bank’s own data, bank credit to SMEs declined 3.3 per cent as of September 18 this year.

It is in this context that the MSME sector needs more support from the Indian banking sector. MSMEs can be the growth-propeller of India’s economy and also the star performer in Prime Minister Narendra Modi’s dream `Make in India’ initiative with proper policy initiatives and their implementation.