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GOVERMENT SUPPORT TO SMALL MEDIUM ENTERPRISES

Abstract

SHWETA SAXENA Department of Management Studies,Jai Narain Vyas University, Jodhpur

Rajasthan, India.

E-mail:shwetasaxena0205@gmail.com

There is consensus among policy makers, economists, and business experts that

small and medium enterprises (SMEs) are drivers of economic growth. A healthy

SME sector contributes prominently to the economy through creating more

employment opportunities, generating higher production volumes, increasing

exports and introducing innovation and entrepreneurship skills. The dynamic role

of SMEs in developing countries insures them as engines through which the

growth objectives of developing countries can be achieved.

It is estimated that SMEs employ 22% of the adult population in developing

countries1. United Nations Industrial Development Organization (UNIDO)

estimates that SMEs represent over 90% of private business and contribute tomore than 50% of employment and of gross domestic product (GDP) in most

African countries (UNIDO, 1999). (2010) estimates that 91% of formal business

entities in South Africa as well as in India are SMEs and that these SMEs

contribute between 52 to 57% to GDP and provide about 61% to employment.

The democratically elected Government of South Africa (SA) and India realized,

as early as 1995, the importance of SMEs to the economy. The White Paper on

National Strategy for the Development and Promotion of Small Business in South

Africa and India (1995) highlighted the fact that Small, medium and microenterprises represent an important vehicle to address the challenges of job creation,

economic growth and equity in our country.

Despite their significant importance and SME contribution to economic growth,

SMEs across the whole world, and in India particular, are still faced with numerouschallenges that inhibit entrepreneurial growth. Apart from SME funding and access

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to finance (which is the focus of this study), the Global Entrepreneurship Monitor

(GEM) Reports (2001-2010) noted that India SMEs also suffer from poormanagement skills which is a result of lack of adequate training and education.

This results in high rates of business failure.

This study investigates the extent of access to credit and support by SMEs in India.

The study was commissioned by the National Credit Regulator (NCR) and it seeksto understand what has been researched and written on SME access to credit and

support in relation to juristic persons as defined by the National Credit Act (NCA).The study is intended to assist the NCR make policy proposal to the Minister for

the Department of Trade and Industry (the dti) on matters affecting the consumer

credit industry in order to improve access to credit for persons contemplated in theAct.