Task force suggests extending stimulus for small, medium businesses for another year

The task force set up to draft measures to provide relief and stability to medium, small and micro enterpises (MSMEs) in the country in the aftermath of the recent economic downturn has recommended the extension of the sector-specific stimulus package by another one year, beyond 31 March 2010.

It also recommended the creation of a Rs5,000-5,500-crore additional budget allocation over the next 3-5 years to specifically target deficiencies in the existing infrastructure and institutional set up.

The task force has recommended strict adherence to the stipulated targets by the commercial banks for the micro enterprises (viz, 20 per cent year-on-year growth for micro and small enterprises lending with 60 per cent apportionment for micro sector).

Besides, it recommended the creation of a separate fund by the SIDBI for filling the shortfalls, if any, against the MSE credit targets set for the commercial banks. This fund named 'Special Fund for Micro Enterprises' should be utilised exclusively for lending to the micro enterprises.

The task force suggested the introduction of a Public Procurement Policy for MSMEs as envisaged in the Micro, Small and Medium Enterprises Development Act, 2006 at the earliest.

The policy may set a goal for government departments and PSUs to reach, over a stipulated period, a target of at least 20 per cent of their annual volume of purchases from micro and small enterprises (MSEs), and mandate them to report their achievements in this regard in the annual reports.