25% Punjab, Haryana SMEs near closure

More than 25% of SME units in Punjab, Haryana, Jammu and Kashmir, Uttarakhand, Himachal Pradesh, Rajasthan and some other states have either closed their shutters or are struggling for survival due to expensive credit, non-availability of timely and adequate funds, increasing power shortages to the extent of 35% and delayed payments by large companies, according to the survey conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The survey says the SMEs contribute to 45 per cent of the industrial output, 40 per cent of exports, provides employment to nearly 80 million people and creates as many as 10 lakh jobs each year. The SME sector also produces more than 8,000 different products annually not only for the Indian markets but also international shores.

However, payment delays by corporations raise the transaction cost of small and medium enterprise (SMEs), which eventually bring these to the verge of sickness, pointed out the ASSOCHAM survey on "Spreading sickness in SME Sector".

The survey reveals that the most important reason for sickness in the sector is the absence of time bound programme for credit dispensation ( 71 per cent of sick units), shortage of working capital (48 per cent), marketing problems (44 per cent), power shortage (21 per cent), non-availability of raw material (15 per cent), equipment problems (10 per cent), labour problems (7 per cent) and management problems (5 per cent).

The survey was undertaken in Uttar Pradesh, Haryana, Punjab, West Bengal, Rajasthan, Madhya Pradesh, Bihar, Himachal Pradesh, Jammu and Kashmir, Uttarakhand and Delhi, said D S Rawat, Secretary General ASSOCHAM.

Delayed payments further reduce the working capital available with a unit for productive use and, thus, hasten the move towards sickness, added majority of the respondents. Nearly 76% of the respondent said that they do not have access to institutional credit have shortage of cheap funds to operate competitively.

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