An autonomous research institute under the Ministry of Finance

 

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(Co-authored with Amrita Pillai)

 

In an ongoing effort to help the MSMEs, the Ministry of Micro, Small and Medium Enterprises launched the CHAMPIONS portal in May. The acronym stands for Creation and Harmonious Application of Modern Processes for Increasing Output and National Strength.
 
Touted as a one-stop, single-window system, the portal seeks to encourage and handhold MSMEs with the information they need on a variety of issues, ranging from access to finance, raw materials, and labour to seeking regulatory permissions. It is intended to help the MSMEs capture new opportunities in the field of health and hygiene amid the crisis caused due to the pandemic and the subsequent lockdown. It also seeks to identify bright MSMEs, which have the potential to excel in their business.
 
How is CHAMPIONS different
 
Until the introduction of the CHAMPIONS portal, grievances could be lodged either on the central government’s CPGRAMS portal or on the MSME SAMADHAAN portal. The latter is an e-tracker of grievances specifically related to delayed payments to the MSMEs.
 
CHAMPIONS is understood to be a comprehensive portal that pulls in grievances from both these existing systems. The grievances, based on their nature, are claimed to be routed to the concerned branch/bureau/office heads under the MSME ministry, who have to attend to them within three days and ensure these do not remain inconclusive after seven days.
 
The portal enlists answers for Frequently Answered Questions on recent credit-injecting measures, government e-marketplace, GST, labour and employment in MSMEs etc. It also houses a bank for MSME ideas, innovation and research portal within it.
 
In about five weeks since the launch, nearly 50,000 complaints filed through the portal have been resolved. Applicants can check the status of their grievance too.
 
Potential improvements to the portal
 
CHAMPIONS is a right step towards fulfilling the larger objective of supporting and hand-holding smaller units hit by an abrupt halt in business activity. There is, however, scope for improvement in how this single-window system operates.
 
What entails a grievance being ‘resolved’ needs to be stated clearly, especially in matters where a lending institution has not extended credit as per government guidelines, or where multiple stakeholders are involved. It is important for the government to detail exactly when a grievance is resolved: is it when a response is secured from the stakeholder or when the MSME unit/individual who raised the grievance is satisfied and has confirmed to the control room to close the ticket number?
 
Another improvement could be the linking of CHAMPIONS with other web-based mechanisms of the MSME ministry at the front end. At present, the portal has no real-time tracker with which the public can gauge the nature of suggestions offered or ascertain the regions from where most new grievances are being lodged, including the type of grievances most commonly recorded etc. Since this portal is linked with other existing grievance redressal systems at the back end, it would be pertinent to know how many existing grievances from the SAMADHAAN portal have been fast-tracked and addressed on CHAMPIONS. This is relevant because a sizable number of applications on delayed payments are currently pending with the Micro and Small Facilitation Council (MSEFC) and for a large number of applications, there has been no response by the concerned government agency.
 
Government hand-holding is important
 
As per the latest data on sectoral performance, the MSMEs have contributed about a third to India’s GDP and close to half of India’s exports and manufacturing output. It remains a very critical sector that needs finance, skill and other requisite support. Such augmentation is required not just in the interim, to alleviate economic stress due to the coronavirus pandemic, but also in the long run. The problem of delayed payments to the MSMEs needs resolution. Despite legal protections and mandatory filing of information detailing outstanding dues to the MSMEs, large companies hold back payments to them. A recent study suggests that large corporates with strong liquidity backing have yet to release Rs 3.3 lakh crore to the MSMEs.
 
Credit to the sector has been declining — MSME share in total outstanding bank credit as of April 2020 has further fallen to 5.03 per cent from 5.29 per cent in March and 5.37 per cent in February. As per a recent survey assessing the impact of Covid-19 on the sector (more than 360 enterprises surveyed), 45 per cent firms said they used their own capital and informal means as primary sources of finance. Despite the crisis, 63 per cent of those surveyed said they did not approach any bank for funding support, and of the 37 per cent that did, only a third managed to secure funding.
 
The Emergency Credit Line Guarantee Scheme (ECLGS) is a good initiative for existing borrowers. While it seemed to have starting trouble because of the risk-averse lending attitude towards the sector, the loan amounts sanctioned by Public Sector Banks under the Rs 20 lakh crore Atmanirbhar package announced last month has so far touched Rs 42,739.12 crore, with Rs 22,197.54 crore disbursed. Private banks have sanctioned Rs 32,687.27 crore and disbursed Rs 10,697.33 crore since 1 June.
 
Availing fresh loans is a double-edged sword for the MSMEs as without a pick-up in demand, the interest will keep mounting. The suggestions and grievances lodged on the CHAMPIONS portal must be appropriately analysed to assess whether there is a further need to tweak current measures or develop pipeline measures for the MSMEs in sectors worst hit— construction, textiles, export–linked etc.
 
With six crore micro unincorporated non-agricultural enterprises in India, which account for close to 30 per cent of overall MSME debt demand, it is imperative that initiatives such as the CHAMPIONS portal be geared towards checking and ensuring effective implementation of government measures to alleviate stress on these enterprises.
 
The authors are, respectively, a Fellow, and Research Fellow, NIPFP.
 
The views expressed in the post are those of the author only. No responsibility for them should be attributed to NIPFP.
 
This article was published in The Print on June 26, 2020.
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