Must revisit policies for credit access to MSMEs, says Rajiv Kumar

Services such as access to credit, technology, market and information are readily available to the formal sector but not to the informal sector said NITI Aayog's Rajiv Kumar

Niti Aayog Vice-Chairman Rajiv Kumar on Thursday said there is a need to re-look at public policies for small, medium and solo entrepreneurs so that highest standards of services reach them and they also get access to cheaper credit.

He also said women need to be given special attention on nutrition and education, as these are important for them to become successful entrepreneurs.

"I think there is a huge need for financial sector reforms, re-calibration..there is a huge supply bottleneck of credit in the financial system for small, medium and solo enterprises," Kumar said at an event here.

He said that often, it happens that these people borrow money at a high cost of 3 per cent per month and there is a need to see what can be done in this area using technology.

"We need to see how to create the culture of bringing angel investors for these small enterprises, how to bring technology...we have to see what could be public policy steps to ensure that the small, medium and solo enterprises have access to the highest and most-developed forms of services that they need. We need to focus on our policy," Kumar said.

Services such as access to credit, technology, market and information are readily available to the formal sector but not to the informal sector, he said.

"At the moment, there is nothing like that (access of services to the informal sector). As pointed out in the last economic census, we had 6 million economic units and 50 per cent of those are small, very small in the informal sector without any access to anything in the formal sector and, therefore, they employ only 13 per cent of the total employable," Kumar said.

He added that it is good to dream about the fact that 50 per cent of the gross domestic product would come from micro, small and medium enterprises (MSMEs) but at the moment, we are too far away,"

He said the Indian entrepreneurs are the best in the world but they face lack of services that a developed state can provide.

Talking about women entrepreneurs, Kumar said the ground reality is that there are women who are undernourished and it is even higher in case of female child.

"This is the ground reality, which if we don't tackle now, I think all our dreams will come crashing down because anaemic women, anaemic mothers, undernourished children don't become entrepreneurs, they simply are fighting to survive," he said.

"We have to take that into account and think that 3-4 per cent of our children are undernourished."

The Niti Aayog vice-chairman also said there is mentality to think that women cannot become successful entrepreneurs.

"Therefore, we need to start off with two or three major things if we want to achieve what we want. One, I think we need to do whatever we can to end the situation of women undernourishment, and along with that, we need to focus on women education," he said.

"Unless you do those two things, I think rest of the things will not matter and women education is actually in a worse situation," he added.