Our institution has this habit of always neglecting Small and medium enterprises from the major access of financing them at a rational cost. However, nowadays linking borrowers with lenders have now become very common and people are trying their best to become used to it. People have now realized the importance of improving the risk enthusiasm and bringing on a good modernization and innovations especially in the channels where borrowers and lenders are linked.
There are many facts and figures which are carried on by researchers and studies. However, a report has proved that the Small and Medium Enterprises SME’s contribute approximately or more than 8-9% of the GDP that is Gross Domestic Product of India. Also, in the total exports of India, the percentage of exports of SME’s is 40% of total exports. In the total output manufacturing of company, the inclusion of SME’s is only 45% overall.
The growth or the percentage involved is also very much dependent on the people employed in that particular sector. The absolute scale is also replicated by the people who work that means who are actually employed there. A report from Ministry has suggested that Small and Medium enterprises sector has more than one hundred million people. This is such a vital segment of our country and the involvement here will only increase day by day. It will never decrease at any cost.
Reports have even suggested future and they say that the Small and Medium Enterprises will now contribute more than 50% in India’s GDP (Gross Domestic Product). However, this report is said to come true or live in the next ten year that is 2024.
Supports that Small and Medium Enterprises need
Small businesses in our country have always suffered a lot. They are always deprived of the attention, concentration, and awareness that they should get. Regardless of all the facts and segments SME’s have not received any support or any attention. They actually deserve all this but they really could not receive it due to our ignorance. The support which they always need was never with them.
There are so many, ample amount of things which are always missing whole giving support to SME’s. The infrastructure of our country is very poor which is directly or indirectly affecting SME’s a lot. The government has always proved to be very illogical and irrational while making law and giving orders and also while putting on the regulations.
The poor people are always deprived of latest and affordable technology. There are problems of power cuts, no marketing platform exists for them and even there are so many issues related to the distribution network. No institution supports them and even the labor issues are now mounting up.
How to solve this confusing Financing puzzle?
For a business, finance is very much needed. It is like a blood in the body. In a body, blood is very essential. Without blood, the body cannot survive. It really cannot survive. Same is with the finance and business, finance is blood and business is a body. Business cannot survive without finance. It is a salvation of business. People might be surprised to know the fact that Finance or financing is one of the biggest disincentive or restraint in our country India. It is a curb, especially for the Small and Medium Enterprises.
There are so many issues related to Small and medium enterprises. Disclosure to SME is considered as a little inappropriate and also not effective in terms of risks and cost too. Small and medium enterprises are considered as cost ineffective and a little bit risky from the point of view of a bank.
However, the banks cannot be solely blamed for this. Small and medium enterprises and their businesses are also playing a key role in making them cost ineffective and less trustable. Business is to be blamed for this because they are not keeping the record of their transactions and even if certainly, they keep then the quality is never up to mark. Also, they used to give more preference to cash transactions rather than the usual transactions.
Change is going to come in the wind
There have not been so many initiatives to make up for the Small and Medium enterprises but yes recently Government has tried to take up incentives to solve the problem of financing in the Small and Medium enterprises. There are many policies which are adopted by the government for financing Small and Medium Enterprises. The government has come up with many initiatives; it has even focused on the re-implementation of public procurement policy. There are many other yojanas in the lane as well. Pradhan Mantri MUDRA Yojana, Make in India, Startup India, and even a policy names Skill India has been initiated by the government.
The government has even planned many things for Small and Medium enterprises. Monetary and technological support is granted and tried to make accessible to Small and Medium enterprises so that they are never deprived of finance which is blood to them and technical support which is very essential to them.
Also, there are two main policies which are focused. The recent one is “Demonetization”. Demonetization is very much popular because the government has introduced it. It mainly focuses on reducing the dependence of business on cash and moving towards dealings that are usually done digitally. This is very effective for Small and medium businesses and one of the perfect solutions of nurturing Small and medium enterprises for financing solutions.
The second incentive is Loan frame. Loan frame is a lending option in the market that has helped small and medium enterprises to a great extent. Financing problems are solved to a great extent.