Credit to SMEs to double in five years: PM

New Delhi, Aug 30: Acknowledging that access to affordable credit is a major area of concern for small and medium enterprises, Prime Minister Manmohan Singh today said the recent policy package would double the credit flow to this sector within five years.

The Prime Minister made the statement at a function where he gave away National Awards for Micro, Small and Medium Enterprises.

''I am aware of the fact that a major area of concern of our small and medium enterprises is access to affordable credit. To improve the delivery of credit, we have announced a 'Policy Package for Stepping up Credit to SMEs'. I hope we can double the credit flow to this sector within a period of five years,'' he said.

The Government recognized the importance of extending social security to workers in the micro and small enterprises sector. As a first step in this direction, it had declared its intention to provide an old age pension to all citizens above the age of 65 and living below the poverty line, he said.

''We will also provide life and disability cover to one earning member in each family so that they and their families can get over the consequences of injury or death.

''We are also working on a health insurance model so that our poor do not have to bear the high cost of medical care. I am sure these initiatives will benefit all workers in the SME sector in particular. Through these three initiatives, we intend to ensure a minimum level of social safety for all of them.'' Dr Singh urged banks and financial institutions to come forward and support and nurse SMEs, especially through risk and venture capital support.

The Credit Guarantee Fund, set up to provide relief to those small entrepreneurs who were unable to pledge collateral security, had steadily gained acceptance among bankers who were initially hesitant, he said.

''I do believe that SMEs have demonstrated their ability to be globally competitive. The National Manufacturing Competitiveness Council has also recognized this fact and has come forward with new ideas to further enhance the competitiveness of this vital sector.

The fact that SMEs have done well in terms of their share of exports shows that we have a globally competitive sector.'' The UPA government had set up, for the first time, a statutory National Board for Micro, Small and Medium Enterprises, bringing together representatives of SMEs along with policy-makers, bankers, trade union leaders and others, he added.

''I sincerely hope the Board will guide policy and help our enterprises become more competitive and efficient.'' Dr Singh said his government was open to new ideas on how industrialization could be spread across the country by encouraging new enterprises.

''I invite all enterprises in this sector to pay greater attention to quality, reduction of cost and to the welfare of their employees and workers.''

UNI