With a year passed after the introduction of GST, the time is ripe for the State Governments to leverage the progress on GST to create conditions for job creation, especially in the MSMEs sector.
World over and especially in a State like Odisha, the MSME sector is a key economic growth driver. But the growth of the sector has been stunted, not for the lack of entrepreneurial skill or zeal, but because of inaccessibility to adequate finance.
This is all set to change with the adoption of GST, with banks and finance companies now willing to consider making lending decisions, not on the basis of the collateral offered by a borrower but on the basis of sales reports as indicated in the GST filings.
According to S swaminathan, Odisha born CEO of Mumbai-based IRIS Business Services limited, the initiative has been launched to put together a consortium of traditional and new age financiers to explore the possibility of launching this business across the country.
"Naturally, the opportunity is highest in States with a low credit deposit ratio and where there are a large number of MSMEs,” he added. According to data available from the Odisha government, the number of MSMEs registered in the State is 19.80 lakh.
He said the company would the data enabler for this funding, through a bridge that brings together various agencies of the State Government, banks and finance companies and the MSMEs. The State can enable a MSME focused and GST-led credit offering which can be combined with targeted incentive structures such as interest subvention and credit guarantees and can be rolled out within the next six months or so through a public private partnership, he added.