Business

MSMEs Sector Struggling For Growth As Loan Defaulters Double In 1 Year

JAVED SAIFI | 0
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| September 3 , 2018 , 12:23 IST

As Micro, Small and Medium Enterprises (MSME) struggle for growth in the wake of demonetisation and GST (Goods and Services Tax), Reserve Bank of India latest figures revealed that their loan default margin has doubled, media reported on Monday.

According to RBI, the loan defaulters margin has doubled from Rs 8,249 crore by March 2017 to Rs 16,118 crore by March 2018.

The advances to micro and small units have also increased by 6.72 percent to Rs 10,49,796 crore by March 2018 against Rs 9,83,655 crore by  March 2017.

Also Read: Former RBI Governor Raghuram Rajan Lauds Modi's Fiscal Strategy, Suggests To Focus On CAD & MSMEs

Among the total loan defaulters, the public sector banks account for most loan defaulters which had a share of 65.32 percent in outstanding loans to small units, down from 66.61 percent in the previous year.

In India, the MSME sector constitutes a vast network of over 63 million units and employs around 111 million people. The share of MSMEs in overall GDP is around 30 percent. The MSMEs sector accounts for about 45 percent of manufacturing output and around 40 percent of total exports of the country.

On August 18, the RBI in its study revealed that the MSME sector has witnessed two major recent shocks, viz., demonetisation and introduction of GST that led to an increase in compliance costs and other operating costs for MSMEs as most of them were brought into the tax net.