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'Small biz yet to recover from demonetisation, GST'

Tuesday, March 13, 2018

Even as the economy has largely recovered from the shocks of demonetisation and GST implementation, micro enterprises with borrowings of under Rs 10 lakh are yet to fully recover, a report said yesterday.

"Micro, small and medium enterprises (MSMEs) with exposures from Rs 10 lakh to Rs 10 crore have recovered to pre-demonetisation levels, (but) the segment with exposure of less than Rs 10 lakh has still not recovered to that extent," the report by Transunion Cibil and Sidbi said.

It can be noted that the uptick in growth, wherein the GDP expansion accelerated to a 7.2%, had led many watchers to say that the worries of the twin reform measures are behind the economy.

The report reiterated that the situation has improved in all segments except those with borrowings less than Rs 50 lakh, where the systemic exposure has not caught up with pre-demonetisation levels.

The note ban and GST, have however, upped the 'formalisation' of the economy which is seen in an increase in 'new to credit' MSMEs at 4 lakh units in the second half of 2017, as against over 2.7 lakh in the year-ago period.

On the critical factor of non-performing assets, the report said impaired assets in MSMEs have been "range bound", but the proportion of stress increases with the quantum of exposure, which means NPAs among smaller enterprises are lower as compared to the bigger ones.

The micro enterprises having borrowings of less than Rs 1 crore had an NPA of 8.8% in December 2017 versus 9.2% in the year-ago period.

"There is a structural opportunity in the MSME segment, which is both profitable as well as impactful," Sidbi's CMD, Mohammed Mustafa told reporters.

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