GURUMURTHY CALLED FOR IMMEDIATE FINANCIAL INCLUSION OF NON CORPORATE SECTOR
“The Non Corporate Small Business Sector which has outperformed Corporate Sector in terms of contribution in National GDP, employment, exports and domestic manufacturing, needs a viable financial architecture for its structured development and to give a boost to national economy”-said well-known economist and financial adviser Mr. S. Gurumurthy at a National Round Table Conference on “need of a financial architecture for non-corporate small business” held at New Delhi by Action Committee for Formal Finance for Non-Corporate Small Business, a group constituted by various national organisations of non-corporate sector including Traders, Transporters, Truck Operators, SMEs, self-entrepreneurs, women entrepreneurs, hawkers, labourers and other sectors.
Mr. Gurumurthy while inaugurating the Round Table Conference said that the non-corporate sector is economic backbone of the Country which produces a value addition of Rs.6.28 lakh crores per year but this sector is the most financially under-served limiting the economic progress of the nation. The banking institutions could able to provide only 4% financial needs of this sector.
There are about 5.77 crore unincorporated non-agricultural enterprises in informal sector providing employment to about 46 crore people in the Country out of which about 24 crore people are self-employed. He also said that about 61% enterprises in non-corporate sector are owned by backward classes. He further said that the best way to make India’s economy fully formal is to extend the reach of the financial system.
Mr. Gurumurthy further said that 90% of the informal sector does not access outside source of finance. The Banks do not finance the non-formal sector which are largely unregistered due to High HR cost to lend and also due to basel norms which makes it difficult to finance even registered MSME sector, leave aside the unregistered small business. Mr. Gurumurthy called for creation of Small Business Finance Companies or Institutions as a financial architecture for non-corporate small business in the Country. He further said that the non-corporate sector holds huge promise for entrepreneurship, self-employment and livelihood and therefore there is an urgent need of financial empowerment of this sector in larger interest of the nation.
Mr. Praveen Khandelwal, National Coordinator of the Action Committee informed that similar Round Table Conferences shall be held at Mumbai, Kolkata, Ahmadabad, Chennai, Hyderabad, Bangalore, Cochin, Nagpur, Bhopal and Kanpur within next two months. The Action Committee shall also hold 30 “Jan Adalat”, a form of public hearing, in different states of the Country in next two months where people belonging to different groups of non-corporate sector will narrate their problems and difficulties in obtaining requisite finance from banks and baking institutions. Such hearings will bring the ground realities of financial sector into limelight.
The Action Committee intends to prepare a White Paper based on the inputs received from Round Table Conferences and Jan Adalat which will be submitted to Prime Minister, Finance Minister, Commerce Minister, MSME Minister, Chief Ministers and Finance Ministers of different states and RBI Governor. Copies of the White Paper shall also be submitted to senior leaders of different political parties and MPs of both houses of Parliament.
The Action Committee include the Confederation of All India Traders, All India Motor Transport Congress, All India Confederation of Goods Vehicles Owners Association, All India Transport Welfare Association, Federation of Indian Small & Micro Enterprises, National Hawkers Federation, Bhartiya Kisan Morcha, Laghu Udhyog Bharti, Institute for Enterprise Research & Development, Fruits & Vegetables Commission Agents Wholesale Traders Association and many other leading national and state level organizations of different sectors of non-corporate sector.