A sickness of MSME in India:

A sickness of MSME in India:

There are about 5cr MSMEs in India. These MSME’s play a vital role in the social and the economic development of a nation. They contribute significantly in a generation of employment, income distribution, and also to the GDP of the country. MSME’s ranks second only to agriculture in terms of generation of employment.

But there’s one big problem that these MSME’s face. That is the sickness of MSME. RBI’s definition of Sickness is “An MSE is considered sick when any of the borrow accounts of the enterprise remains NPA for three months or more or there is erosion in the net worth due to accumulated losses to the extent of 50 percent of its net worth.”

There are two major factors that cause Sickness in MSME. (i) External Factors (ii) Internal Factors

External Factors include the change in industrial policies due to change in governments, Lack of Demand, Lack of inputs such as Raw material, power etc. and problem with banks such not getting money for working capital in time. Internal factors such as Deficiencies in departments such as Marketing, Finance etc. due to the entrepreneur focussing on few things and neglecting other important factors, Mindset of the entrepreneur can also cause sickness.

It is of utmost importance that the entrepreneur recognises the signs of symptoms as early as possible and take effective measures such as hiring professional consultants for suggestions to improve business. Bankers also play a key role in reviving sick units as timely money will be the need of the hour for sick MSME.

With so many things at stake such as employment, contribution to GDP and several other things it is high time that the government and the banks look into the matter with utmost importance help the entrepreneur, as well as the MSME community, grow as a whole.

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