FISME gives its views on Credit Rating Scheme to House Panel
FISME, the voice of Indian Micro, Small and Medium Enterprises (MSMEs) with a network of 730 MSME associations was given an opportunity on April 3, 2012 to present the views of its constituents on the Demand for Grants (2012-13) for the Ministry of MSME before the Parliamentary Standing Committee on the subject matter. Apart from submitting written submissions the FISME delegation led by President Mr V.K. Agarwal highlighted two major issues before the Standing Committee: (a) need for mechanism to ensure implementation of public procurement policy, and (b) need for a new approach on government spending on MSME schemes.
In this context the FISME President pointed out that the benefits of credit rating schemes have not accrued to MSMEs so far because the rating given by the agencies are much inferior to those given by their own lender banks, causing avoidable problems for the MSMEs. Besides the agencies have yet to develop an evaluation system which can unearth the hidden potential of MSMEs and present their strengths and weaknesses relevant to the needs of the financial assistance extended. It is for the reason that a vast majority of MSMEs who went for Credit rating using subsidy did not renew their rating in the following years as they did not see any value. He, therefore, suggested that for this reason the amount earmarked for the scheme should be kept in abeyance until a way out is found or it should be utilized under more useful heads of expenditure.
The FISME President told the standing committee that with regard to:
i. Mechanism for ensuring implementation of Public Procurement Policy
An institutional mechanism - a high-powered committee, ought to be put in place with adequate representation of stake-holders to ensure the implementation of policy in letter and spirit, to ensure compliance by different agencies, to redress grievances and to consider issues such as exemption.
ii. A new approach to spending
Large outlays should be limited to demand driven schemes for which mechanism for continuous consultations needs to be evolved. All new schemes should be on pilot basis with scope of monitoring and evaluation by the beneficiaries built into these. All government departments and institutions should be asked to upload on their sites their budgets and actuals in terms of performance and spends.
The full text of FISME’s views submitted to the Parliamentary Standing Committee are given in Annexure I: FISME’s views on Union Budget 2012-13 (Presented before the Department Related Parliamentary Standing Committee on Industry) and Annexure II: FISME’s views on Demands for Grants (DDG) (2012-13) for Ministry of MSME.