Amritsar MSMEs grapple with rising interest rates, high inflation

Amritsar, August 21

Border district-based Micro Small Medium Enterprises (MSME) have been grappling with difficult circumstances in the wake of interest rate hike following the rise in repo rate by the RBI.

Piara Lal Seth, president of the Punjab Pradesh Beopar Mandal (PPBM), said the Reserve Bank of India (RBI) hiked the repo rate by 1.4 per cent in the last four months, upsetting their business calculations.

Repo rate hike upsetting business calculations

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The RBI hiked the repo rate by 1.4% in the last four months, upsetting our business calculations. The interest rate of advances taken by MSMEs has become expensive, which is directly increasing input cost of products being rolled out of these units. Piara Lal Seth, president of the Punjab pradesh beopar mandal

Announce special relief for MSME sector

The government should first take immediate cognizance of the MSME sector and announce a special relief to bail it out from the interest rate hike. It will pave the way for acceleration of industrial activities. Sunil Mehra, Punjab pradesh beopar mandal

The interest rate of advances taken by the MSMEs has become expensive, which is directly increasing input cost of products being rolled out of these units. The MSME sector was already passing through an existential crisis due to hike in raw material, fuel cost, cargo cost and other factors emanating out of the Covid-19 pandemic, he said. On the other hand, the rise in food inflation has reduced the paying capacity of consumers.

He said the RBI hiked the repo rate thrice by 0.4 per cent in May, 0.5 per cent in June and 0.5 per cent in August this year.

Sunil Mehra of the PPBM said the government’s argument that the repo rate was increased to prevent rising inflation was micro, which ignores the interests of the MSMEs. Hence, its negative impact on the economy would be visible in the coming days.

He sought that the government should first take immediate cognizance of the MSME sector and announce a special relief to bail it out from the interest rate hike. It would pave the way for acceleration of industrial activities.

He demanded that two per cent interest subsidy to the MSMEs must be implemented to provide a solace to the sector which offers maximum employment to industrial labourers.