MSME sentiment improves in Q3 due to positive factors: Survey

Chennai: The government’s assiduous efforts in bringing back the micro, small and medium enterprises (MSME) from their pit has finally bore fruit, according to a recent report that states small business sentiment improved in the December quarter.

The development came even as NBFC liquidity crunch impacted economy on on positive factors like festivities, rupee depreciation, and dip in oil prices.

The improved MSME sentiment looks to turn the headwind into a tailwind as the government works towards improving market terms for small industries.

According to the Crisidex survey, undertaken by Crisil and the dedicated arm for small businesses financier Sidbi, a special score moved up to 128 during the reporting quarter from 124 in the preceding quarter and 107 from the year-ago period.

An increase in order book size and employee base for manufacturing MSMEs and a rise in profit after tax margin and employee base for services MSEs boosted the sector, the survey said.

It must be noted that, the RBI, persuaded by the government, announced a special relief package of loan recast (up to Rs 25 crore) for MSMES earlier this year. Earlier this month the central bank had in its bi-monthly monetary policy reduced the key policy rates by 0.25 per cent, the first rate cut since August 2017.

Banks also expect a minor improvement in asset quality from MSEs, the report that was release on Friday said, adding three of 10 lenders surveyed saw an improvement in the overall business situation of MSMEs and half of them as satisfactory.

The survey says most small businesses expect the ‘feel good’ factor to hold on to the next quarter as well.

Over 40 per cent of those surveyed from both the manufacturing and services sectors spoke about December being a good quarter, it said.

From a job generation perspective, the report said 20 per cent MSMEs reported hiring in the reporting quarter, compared to 14 per cent in the preceding quarter and a quarter of them want to hire in the March quarter, while six per cent intended to reduce headcount.

‘Over half the respondents each from manufacturing and services expect the positive momentum to continue (in the March quarter),’ chairman and managing director, Sidbi, Mohammad Mustafa said.

He said in the manufacturing space, pharma, gems and jewellery, and chemicals, while in services, professional services, traders, logistics and power and power utilities are the most optimistic.

Crossing Rs 30,000 cr
The psbloansin59minutes portal, a central government initiative to provide in-principle approval for small business loans of up to Rs 1 crore from public sector banks and Sidbi in less than an hour, has seen around Rs 30,000-crore loans sanctioned since its launch in September.

The government is hopeful that credit offtake will see a further jump as banks transmit the 25 basis rate cut announced by the Reserve Bank of India earlier this month, reports state.


On the contrary
Meanwhile, Primary Consumer Sentiment Index (PCSI) showed that rising inflation, low liquidity and jobs scarcity has led to a fall in consumer confidence in February. PCSI saw a downward slide, a drop by 0.9 per cent, in consumer confidence this month, according to a study by Thomson Reuters-Ipsos.

NT Bureau