Business Confidence Index for MSMEs dips: CII

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IPF is one step ahead, starting a new segment on the problems and solutions for this sector

Reflecting a decline over the previous quarter (January-March 2011), the CII Business Confidence Index (BCI) for Micro, Small and Medium Enterprises (MSMEs) has been estimated at 62.1, for the current quarter (April-June 2011), on an outlook scale of 0-100, moving from most unfavorable to favorable situation.

The outlook of this critical sector has declined over the last quarter by a significant 3.1 percentage points.

Inflation and interest rates have proved to be difficult to contend with for all concerned and could threaten plans to achieve double-digit growth. As a result, a big part of well laid out plans for a booming growth MSMEs have been hit hard.

IPF IS ONE STEP AHEAD

Foreseeing this crucial issue the Industrial Products Finder (IPF) has already started a special segment for this sector.

The May 2011 issue of IPF contains the various steps IPF has initiated to help to intercede in behalf of and solve the problems of MSMEs.

Credit cost and availability for working capital and capacity expansion play a vital role for MSMEs, a point highlighted by IPF.

None of these variables have registered an increase in the quarter with three actually registering a decline, as per the survey report.

Budget initiatives fall short: CII

According to Mr Ramesh Datla, Chairman, CII National MSME Council, the key Union Budget 2011-12, initiatives, included an allocation of Rs 5,000 crore to SIDBI for refinancing incremental lending by banks to these enterprises and Rs 3,000 crore to NABARD to provide support to handloom weaver co-operative societies, which have become financially unviable.

However, it fell short on expectations regarding any fiscal incentives, funds for Technological development and growth or fast track the recommendations of PMO's High level task force report.

The CII Survey, which aims at gauging the mood of the MSMEs a quarter in advance, shows that on average the industrial sector's estimated BCI value of Industrial MSMEs stood at 59.2.

Services sector is found to have convincingly outshined the Industrial sector with regard to, new orders / contracts, exports, capacity expansion and net profit margin. Industrial sector has done well in gross sales and selling prices.

The first quarter for 2011-12, is going to be a crucial one for the Indian MSMEs, said Mr. Gurpal Singh, Deputy Director General, CII.

Further, the prospects on Net profit margin for April-June 2011 in Industrial sector MSMEs may be lower owing primarily to export prospects i.e. attributable to higher foreign exchange earnings.

Out of a list of 14 indicators, the CII Survey highlights 5 variables - gross sales, new orders/contracts, capacity utilisation, capacity expansion and employment-that have crossed 70 on the BCI scale to indicate that prospects for these remain good in the quarter.

All the other variables in Survey registered BCI values in the range of 50-75, indicating a decline in the outlook over the previous quarter.

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