Debt woes stunt MSME potential

While the Micro, Small and Medium Enterprises (MSME) sector plays a major role in employment generation, Telangana has been witnessing lower growth in this sector.

This is because most of the MSMEs have turned into NPAs defaulting on loan repayments.

The employment generation in this sector after reaching a peak in 201314 has been declining since, with several units turning sick due to inability of the enterprises to honour contractual payments, the migratory practices of labour, and largely mismatched skills.

As per the 2016-17 State Level Bankers Committee report, there are 8,618 sick units in the TS as per the RBI definition of industrial sickness.

Eighty per cent of the total sick units have been declared non-viable units, while potentially viable units are only seven per cent (632 units). Employment generation by micro enterprises is less compared to small and medium ones.

Employment generation, after peaking in 2013-14, is declining.

MSME plays an important role in the economic and social development of the state and provide direct employment opportunities to 7,82,406 people, with a vast network of around 69,120 units.

Besides, its contribution is immense in terms of indirect employment, providing inputs/raw material for other sectors and export earnings.

Sector-specific issues and inadequate credit have dampened the growth of the micro and small enterprises post 201314. The medium enterprises are in an almost stable state since 2007-08, without much effect from the vicissitudes of time.

Investments in micro enterprises reached high in 2011-12 and thereafter remained stable, whereas investments in small enterprises peaked in 2013-14 and witnessed a downward trend thereafter. Investment in medium industries is almost stable throughout the period.