Why does government not love SMEs?
Governments ignore struggling SMEs, while favour big corporates.
Governments ignore struggling SMEs, while favour big corporates.
Manoj Harit, an entrepreneur and an advocate gave a talk at Moneylife Foundation. He talked about how banks and government agencies are ignoring the struggling SMEs. As a result they are facing shut downs.
SMEs form the backbone of the economy:
SMEs by default are Make In India, Start Up India or Stand Up India combined into one. They are 49 million SMEs in India, our real entrepreneurs.
SMEs employ 40% of Indian workforce.
They contribute to 45% of GDP.
They grow at a healthy rate of 11% per year.
3 times of corporate India.
SMEs do not get favours as corporate India gets:
Government policies, banks and financial sector don’t favour them as much as they should.
They do not get the access to capital like big companies.
Timelines to repay loans is more strict.
Complex procedures like GST affect them.
There is no safeguard against abrupt disruptions such as demonetisation. Most SMEs operate with cash.
Most policies favour big businesses such as Make In India.
They are in trouble:
SMEs are facing closures.
Their loans become NPAs without their knowledge.
They are unable to spot the signs of sickness, so the debt trap.
They also lose personal properties, since they give it as collaterals.
Things to do to avoid becoming sick:
Manoj Harit specialises in helping small businesses with recovery options. His talk focussed on how SMEs can avoid the pitfalls and avoid shut downs.
Under-financing
Taking personal loans
Borrowing from private lenders
Aim to increase revenue and reduce costs
Infusing more funds to resolve problems
Unable to respond to Debt Recovery Tribunal’s notice in time
Banks misleading the borrowers to auction their properties