Cluster development programme for small businesses moves at slow pace
3 min read . Updated: 07 Apr 2023, 05:14 PM IST
Premium- Out of the revised budget estimate of ₹120 crore for the Micro and Small Enterprises Cluster Development Programme, only ₹78.68 crore was spent as of 1 January
New Delhi: The development of clusters for micro and small enterprises moved at a slow pace in the last fiscal with only three of the 28 approved projects completed as of 1 January, 2023, showed data from the annual report of the MSME ministry for FY23.
The report also showed that out of the revised budget estimate of ₹120 crore for the Micro and Small Enterprises Cluster Development Programme, only ₹78.68 crore was spent as of 1 January. The revised estimate was significantly lower than the budget estimate of ₹262 crore for FY23.
The scheme started in FY18, with an objective to enhance the productivity and competitiveness of micro and small enterprises (MSEs) by extending financial assistance as central grant for establishment of Common Facility Centers (CFCs) in the existing clusters and for establishment of new industrial areas.
For the last financial year, a total of nine common facility centres and 19 infrastructure development projects were approved, out of which only one common facility centre and two infrastructure development project was completed by January 4, 2023.
Even, the progress in the scheme, over the years has witnessed a lacklustre progress. A total of 258 projects including 111 common facility centres and 147 infrastructure development projects have been approved, since FY18 to FY23, out which only 113 have been completed.
The budget estimate for the centre’s allocation pegged so far since the inception of the scheme has been ₹1,500.09 crore and the revised estimate has been brought down ₹951.73 crore. the The actual expenditure as of FY23 has been ₹886.73 crore.
Under the programme, the development of common facility centers, Centre provides up to 70% of the project cost in case of projects worth ₹5-10 crore and the contribution would be capped at 60% for projects worth ₹10-30 crore. In case of northeastern and hill states, island territories, clusters with more than 50% women or SC/ST-owned units, Centre’s contribution would be higher.
Similarly, the Centre’s support for infrastructure development would be restricted to 60% of the project cost, for projects worth ₹5-15 crore for setting up of new industrial estate or flatted factory complex, Centre grant will be 50% of project cost for up-gradation of existing industrial estates and complexes.
The slows progress comes despite government emphasis on supporting MSMEs in the backdrop of the pandemic. On May 13, 2020, Emergency Credit Line Guaranteed Scheme (ECLGS) as part of the Aatma Nirbhar Bharat Abhiyaan to provide collateral free loan to pandemic-affected MSMEs. The scheme was launched as an emergency measure to combat the unprecedented crisis caused in the wake of Covid-19 pandemic and thereby helping the businesses including micro, small and medium enterprises (MSMEs) to meet their operational liabilities and resume businesses.
Citing data from National Credit Guarantee Trust Company (NCGTC), as of December 31, total guarantees amounting to ₹14,583 crore have been issued to 78,924 accounts of MSMEs in FY23. Since inception in 2020 under ECLGS, total guarantees amounting to Rs. 3.60 lakh crore were issued to 1.19 crore accounts, which includes MSMEs and other businesses.