TN has 25,000 sick small industrial units: RBI data

40 pc of 7.2 lakh SMEs in state crippled by power crisis: Industry

C Shivakumar

Chennai:

Tamil Nadu has more than 25,000 sick micro and small industrial units and nearly 40 per cent of 7.2 lakh registered small and medium enterprises in the state are crippled due to irregular power cuts, according to industry sources.

Talking to Express on the sidelines of the one-day workshop on rehabilitation of sick micro and small enterprises here on Tuesday, vice-president of Federation of Association of Small Industries of India  (FASII) T V Hariharan said that more than two lakh SMEs have been hit due to irregular power cuts in the state.

Interestingly, it is not only irregular power cuts but also financial, marketing and production constraints that is eating away the once thriving and now starving sector in the state. According to a Reserve Bank of India data (figures available till March 31, 2012), the state has 25,433 sick units with an outstanding of 817.18 crores.

Director of Micro and Small Medium Enterprises Development Institute S Sivagnanam and deputy director Muthuvezhappan told Express that the RBI data is related to financial constraints the industry is facing. They said that of the 25,000 sick units only 91 micro and small units are being revived which highlights the enormous challenges faced by the sector .

Muthuvezhappan said that the biggest issue is lack of credit flow to the MSMEs. As per the Fourth All India Census, credit flow from financial institution to MSME was only five per cent. He said 95 per cent of small and medium enterprises rely on non banking financial sector which puts them under the mercy of private lenders.

Sivagnanam says the solution is to have a quick exit policy besides a mechanism like fast track court where a separate committee will look into the sick units and suggest whether it should come under the purview of quick exit policy or the state should revive it through financial packages. He also stressed the need for credit guarantee and a separate insurance scheme to cover the sick industry.

Box:

Sickness among Indian SMEs – A fact sheet

--- India has 1.28 crore SMEs

--- Two lakh SMEs in India are sick

--- SMEs in India have outstanding bank credit of over Rs 700 crore

--- 29,000 units are added to sick list every year

--- Number of units falling sick per day 79

--- Three units fall sick every hour

Source: RBI data