President Pratibha Devisingh Patil today asked banks to provide financial support to micro and small enterprises to facilitate growth of the sector that contributes almost 40 per cent to the country's exports.
"Timely financial support is absolutely essential for their (micro and small units) survival, failing which they face the threat of extinction. I urge banks to give specialattention to this aspect," she said after presenting National Awards for Micro, Small and Medium Enterprises (MSMEs) in Delhi.
The availability of adequate credit is essential to the success of the micro and small enterprises, she said. "It must be kept in mind that it is the vulnerable unorganised enterprises, which are still perceived as risky by financial institutions and suffer the greatest constraint in access to credit because of the very nature of operations, especially of the traditional cottage industries," she added.
Emphasising the importance of the sector, Patil said, the contribution of MSMEs to the economic growth of countries was recognized worldwide. In India, these units account for almost 45 percent of manufacturing output, 95 percent of the total strength of the industrial units and 40 percent of exports.
"Clearly they are engines of growth. Besides, the sector provides employment to almost 60 million people, making it the largest source of employment after the agriculture sector," she added.
Another aspect of MSMEs is that 54 per cent of them are located in rural areas, she said, adding that this sector, therefore, has the capacity to generate economic activity in rural areas by using local raw materials, local skills and providing people employment close to where they live.
"I have always believed that our rural economy must not be isolated, but rather integrated with other sectors of the economy, for bringing rural prosperity in our country," she said.
"MSMEs can play a very important role in this regard. I call on MSMEs to become that vital link between our rural economy and our industrial sector, so that through forward and backward linkages, the benefits of growth flow widely and deeply in our country," she added.
Speaking on the occasion Minister of State for Micro Small and Medium Enterprises Dinsha Patel said, the MSME task force set up by the Prime Minister has submitted its report, which provides roadmap for the development and promotion of these units. It has made detail recommendations related to easy availability of credit, marketing, labour rehabilitation and exit policy and taxation, he said.
Of the total 87 recommendations made by the task force, about 40 recommendations includes easy availability of credit and revival of sick units have been been implemented, he said. "We are hopeful that by December this year, all the recommendations will be implemented," he added.