Ministry of Finance Ignores MSME Sector

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In spite of contributing around half of industrial production and exports and employing largest number of people after agriculture, the MSME sector is no longer in the list of groups invited by the Ministry of Finance for pre-budget consultations.

The Finance Ministry used to hold a separate session with the SSI sector earlier which was discontinued in 2004. Only one or two representatives are now invited interspersed with corporate sector groups.

According to V.K. Agarwal President of the Federation of Indian Micro and Small & Medium Enterprises (FISME), “the MSME sector has its own set of issues distinct from the large companies. Their needs and aspirations require customized policy responses.” He, therefore, demanded a separate pre-budget session for MSMEs with the Finance Minister.

MSME associations emphasize the need for government-business consultations covering a wider group. Experts are also of the view that absence of engagement or constricted consultations with wider stakeholder groups is the chief hurdle to consensus building. Recent confusion in introduction of FDI in multi-brand retail could have been avoided if a conscious consensus building approach was adopted
“In the absence of access to institutional platforms of dialogue in many Ministries, MSME associations are left with no option but to resort to rhetoric and to take-up rigid positions creating a lose-lose outcome,” Agarwal said.