No shrimp farmer has ever committed suicide. Is it because their working capital is generally funded by the shrimp exportersIJ If yes, this could bring an end to the farmers’ suicide in India. It is not pertinent that the farmers borrow high-cost funds from moneylenders. The question is why the scheduled banks in their localities did not fund them. Especially, does the SBI with their widespread branches all over the country owe its responsibility to nourish and develop the farmers or notIJ If not, why then does the SBI enjoy a special status from all other banks, even PSU banksIJ
It is but evident that besides stray cases, most of the farmers’ suicides are due to the accrued debts and the fear of losing their probably only dwelling house and of course social humiliation. Here, the issue of funding is definitely more significant than crop failures. With the present technology when commercially vegetables can be grown in deserts, a country like Netherlands with reclaimed land can become the sixth biggest exporter of farm products in the world having a size as good as Punjab, we need to realise that it is adequate funding and providing the funds in right time which is more important than the weather or the issue of crops being damaged by pre–harvest insects like moths and beetles.
Agricultural produce necessarily needs to be value-added to provide better margins to the farmers. This is the job of micro, small and medium enterprises (MSMEs). Selling paddy or rice grain will not enrich a farmer whereas exporting high-quality branded rice like basmati will do. The prices of premium brand basmati may vary from Rs 400 to Rs 900 for a 5-kg pack. Similarly, e.g., turmeric when processed and packed is sold at around ten times higher cost of raw turmeric. Hence, in order to enrich and protect our farmers, we need to develop our MSMEs.
About two decades back when the shrimp culture was introduced in India, especially in the eastern coast, most farms failed because of various issues, the most important being availability of need-based working capital in time. Gradually when the shrimp exports grew, the exporters extended cooperation to the farmers providing them feed for the shrimps and to meet their other working capital needs. By this, the farmers were not required to depend on bank funding and the business started developing by leaps and bounds. Similarly in the marine sector, most trawlers and gill netters also organised their working capital needs from seafood exporters or processing plants. last fiscal, the total export revenue of seafood from India was $5.78 billion by exporting 11,34,948 tonnes of seafood products largely due to a robust demand for frozen shrimp and fish.
Providing subsidies to farmers is definitely not the right solution though it may result in interim relief. What is important is that they must be funded well and their produce must be value-added, for which the role of MSMEs is vital.
It is but obvious that when about 50% of MSMEs are themselves either sick or passing through incipient sickness, not only the agriculture sector but even the large-scale sector will suffer since almost all large[-scale sectors depend on the MSMEs for procurement of their spares, accessories, packing materials and other requisites.
That be so, it is really baffling to understand why the Government is still callous about development of MSMEs in real terms. The various schemes launched by the Centre and the States for development of MSMEs are encouraging, but are they being implemented as desiredIJ
What about rehabilitation of sick MSMEsIJ There are thousands of MSMEs in the country which have turned sick due to unavoidable circumstances for reasons beyond their control.
Many of such units which are potentially viable could be rehabilitated with ease. The rehabilitation scheme of the Reserve Bank of India based on the gazette notifications of the Government of India for rehabilitation of potentially viable stressed MSMEs needs to be effectively implemented.
The framework for revival and rehabilitation of MSMEs has been laid down to ensure a speedy process of revival whereas only less than 5% of potentially viable sick MSMEs have been revived in the last decade.
In Odisha, 1,240 registered MSMEs were shut down due to various reasons from 2004 to 2014. Sure, many could be revived out of this in a short period of time and with small investments. An estimated amount of about Rs 500 crore should be adequate to revive the sector in Odisha and maybe about Rs 10,000 crore shall be required to revive the full MSME sector in India.
The contribution of MSMEs employing about 60 million people with 17% GDP and 40% of total exports is far less insignificant to the wonders it can do to develop the farming sector and curb the ongoing farmers’ suicide across the country. In Odisha, at least some farmers’ families could have been saved if there was an MSME which could stand by the farmer to provide him working capital and or to buy his product.
Our association viewpoint:
1. Potentially viable sick MSMEs must be rehabilitated as a national priority.
2. State Finance Corporations (SFCs) should be provided with rehabilitation funds for identification of potentially viable sick MSMEs and their rehabilitation. In turn, many SFCs passing through financial difficulties shall also be revived.
3. Before initiating legal action on any NPA MSMEs by any banks or FIs, the matter must be discussed in SlIIC (State level Inter-Institutional Committee). The SlIIC was a worthwhile committee founded by the RBI which is almost lying defunct now. If this could be activated and vested with statutory powers, it can prevent many stressed/NPA MSMEs from closing down.
When the Government is planning to pump in Rs 2.11 lakh crore capital infusion to PSBs and Rs 7 lakh crore for the Bharat Mala Project, a small proposed investment of about Rs 500-crore rehabilitation fund for MSMEs of every State should not be a matter of concern.
This total investment could be less than rehabilitating even one major large-scale unit out of many under stressed condition now.
(The writer is working chairperson of EFCAI and a former chairman, Odisha Assembly of Small and Medium Enterprises. Email: efcai12@gmail.com)