Parl panel to assess impact of demonetisation on MSMEs

A parliamentary panel has called for an assessment of the micro, small and medium enterprises to see whether the note ban has led to increase in NPAs for the sector.
In its report, the Department Related Parliamentary Standing Committee on Industry said, "an assessment panel should be made of the impact if any, of demonetisation, on the credit-worthiness of MSMEs and whether it has led to greater NPAs in MSME sector".
It said that certain industry associations have suggested that in view of the possible adverse impact of demonetisation on the business, the time limit for NPA should be extended from 90 days to 180 days.

"The committee views this demand favourably and recommends the ministry (MSME) to take up the issue with the Ministry of Finance and RBI and report to the committee of its outcomes," the report, tabled in Parliament, said.
It also said that the contribution of MSMEs in manufacturing sector is almost stagnant but has steadily increasing in service sector.
"In view of the size of the sector, a budget allocation of Rs 6,482 crore is just meagre and needs to be utilised efficiently and judiciously," it said.

The panel also stated that the MSME Ministry has not assessed the growth in MSME's contribution to GDP and employment post-launch of Make in India initiative.

Further, it said allocation for the flagship initiative - Prime Minister's Employment Generation Programme (PMEGP) - has been reduced despite encouraging response to the scheme.
It recommended to increase the allocations on condition of improvement in the utilisation of that amount evenly throughout the year.
On promotion of khadi products, the committee suggested that Indian High Commissions and embassies may use khadi and village industry items in their office as well as for gifts and presentations.
Further, it said Khadi and Village Industries Commission (KVIC) should tie up with e-commerce companies to promote khadi exports.
Besides, it recommended the KVIC to formulate a transparent method of devolving bulk orders to khadi institutions.