Date:05/03/2008 URL: http://www.thehindu.com/2008/03/05/stories/2008030556252100.htm

Business

‘No concrete proposals to support SMEs’

Staff Reporter

Kochi: The Union Budget 2008-09 recognises the importance of the small and medium enterprises (SMEs) but there is “an apparent unwillingness on its part to recognize SMEs as a constituency,” says P.M. Mathew, Director of the Kochi-based Institute of Small Industries and Development.

He said that a close look at the Economic Survey and the Union Budget showed that the “bottom of the pyramid” had been worst affected by recent developments in Indian economy.

The setbacks in the manufacturing sector happened in two categories of industries — the export-oriented industries, including leather and leather products, handicrafts, textiles, and carpets. These are India’s traditional export industries where the contribution of small and medium enterprises is as high as 90 per cent. The second category, the other-than export oriented ones, includes automobiles (excluding commercial vehicles), paper and paper products, metal-based industries and consumer goods. This category, which is catering largely to the local market, also has a significant presence of small and medium enterprises.

Dr. Mathew said that the Finance Minister, “in a rather apologetic fashion,” speaks of the importance of SMEs, and comes short of concrete suggestions in support of the sector.

He said that while several of the references in the budget indirectly dealt with the SMEs sector, what mattered in governance was a constituency-focused approach which the budget was lacking.