Taking serious concern of the Union Government’s apathy towards Small and Medium Enterprises of Punjab for not providing them special economic package, Brahm Mohindra, Punjab Cabinet Minister today wrote a letter to Arun jaitely, Finance Minister of India and narrated the woes of Punjab’s SME sector.
He urged him to take up the case of Punjab’s SME sector with the Reserve Bank of India to be more lenient towards the SMEs with annual turnover of Rs.1 crore to 10 crores and provide them a breather of deferment of repayment schedule of their financial liabilities for a period of at least one year so that they could realign their priorities in line with new challenges being faced by them.
The original text of the letters reads as;
“I would like to draw your attention to the hardships being faced by the Small and Medium Enterprises of Punjab due to the aftermath of a decade of militancy.
The State had hardly recovered to some extent from the adverse affects of terrorism at a monumental cost to the exchequer for over nearly five years when decade long spell of narco-terrorism hit the State, which proved disastrous for the industrial growth, especially in the vicinity of border areas.
The worst affected has been the employable rural youth feeling frustrated due to lean avenues of employment and thus most vulnerable to the wicked designs of the forces inimical to the national peace and integration.
While the State has prioritized maintenance of peace elimination of drug menace on its agenda, the real panacea lies with survival and liberal support to the SMEs for their flourishment.
Small and Medium Enterprises, are acclaimed as backbone of an economy in general and secondary sector in particular, as they address various economic woes like unemployment, poverty, income inequalities and regional imbalances.
With even meagre investment in comparison to various large scale private and public enterprises, the SMEs are found to be more proficient in creating employment opportunities at a relatively lower cost.
Even SMEs’employment intensity is estimated to be four times greater than that of large enterprises. SMEs contribute 45 per cent of India’s GDP.
This percentage is almost three times what corporate India contributes, and it also shows that the SME sector provides employment to around 46 crores people in India and is registering an annual growth of 11.5 per cent.
It is worth noticing that SMEs help in achieving socialistic goals of equitable growth by providing employment opportunities in the rural and backward areas.
Precisely, equitable distribution of national income is linked with the survival of the small and medium enterprises.
Besides issues like high cost of raw material, limited access to global market, lack of manpower, stringent labor laws and absence of business-friendly environment, SMEs also feel plagued by various challenges like poor infrastructure to increase production capacity, lack of adequate funds, little scope for innovation, technology knowledge gaps, lack of training skills and inability to attract tech-savvy talent.
On top of it, the SMEs are confronting stiff competition from on-line marketing by big industrial giants.
The concerns about infrastructure and finances require cost-intensive measures, and both the government and private sector companies are taking several steps to address these.
Other challenges are closely linked with digitization.
These can be addressed through Technology Knowledge Transfer, a process through which technology is disseminated from experts to concerned individuals or organizations to bridge the digital skill gap.
Current policy initiatives, such as Digital India and Skill India, are focused on helping SMEs become digitally literate and train their manpower to develop necessary digital skills.
SMEs need recourse to innovation, take their businesses online, accept e-payments, upgrade existing technological know-how and compete globally.
Even with the rapid adoption of technology in the country, many SMEs don’t even possess basic computer literacy skills – creating a digital presence through websites, mobiles or social networks is almost impossible for them.
Operating on low margins and funds, they cannot afford payment of attractive salaries. Hence, they struggle when trying to hire candidates with digital competence.
As a result, their sustenance is under threat.
It is particularly so for the SMEs situated in the landlocked states like Punjab, which has not yet fully recovered from demoralizing exodus of industrial labor and closure of major industry on account of long spell of terrorism.
The worst sufferer has been SMEs. As a natural corollary, growth rate of employment received a serious jolt.
Unhindered extermination of SMEs in the border areas, facilitate fulfillment of evil designs of our neighbor country to hook the unemployed rural youth in the border belt to consumption as well as pedaling of drugs.
All energies and resources of the State go into containing the drug menace and spurt in the anti-social activities wrongly termed as law and order problem of the State.
In these circumstances, it is high time that you should kindly take up with the Reserve Bank of India to be more lenient towards the SMEs with annual turnover of Rs.1 crore to 10 crores and provide them a breather of deferment of repayment schedule of their financial liabilities for a period of at least one year so that they could realign their priorities in line with new challenges being faced by them.
The trigger is of course with you.”