With the Micro Units Development Refinance Agency (MUDRA) in place to fund small and medium units, the government is keen to promote the entrepreneurial sector, said Union Minister of State for Finance Jayant Sinha.
“We have put together an approach that will be quite meaningful and shortly make an announcement to assist entrepreneurial sector. Stay tuned,” Sinha told corporate leaders and industry representatives at ‘Breakfast with BusinessLine ’, an interactive session at the Crowne Plaza in Chennai on July 11.
If the US is the innovation hub and economic engine for the top one billion — the affluent segment of the world population — India has the potential to be the innovation hub and economic engine for the next six billion of the world population. What is designed, developed and exported from here will be of great user value for the masses, he said. It has happened in auto manufacturing as an export hub for small cars. This will follow in solar energy, medical devices, in smartphones.
“India does have the potential to be at the economic edge,” he added.
To ensure this, the MUDRA Bank would soon have its own statutory shape and create a financing ecosystem for MSMEs and the informal sector. The Refinance Agency “will be about loans in lakhs of rupees not in crores” and support small businesses, retailers and vendors, he said.
This is just one of the elements the government is putting in place for promoting entrepreneurship. In order to nurture innovation, the government has also set aside significant funds for creating a network of innovation labs in educational institutions and the private sector. The Centre has also improved ease of doing business for the venture capital industry by providing pass-through tax status to alternative investment funds and launching a new institutional trading platform for innovative start-ups to list. A fund of funds will also be launched to propel the innovation economy forward, Sinha said. Drawing from his own experience as a venture capitalist, Sinha said the concern in the entrepreneurial sector is not about availability of funds but about viable and scaleable ideas.
Unlike in the past, when funding was a key constraint, any good business plan with capability and management is getting funded today. There is a mismatch between what entrepreneurs expect and what investors are willing to finance, he felt.
Capitalisation & NPAs
Responding to a question on capitalisation of banks and whether this would pose a constraint to growth, he said, “We have a solution for that and will discuss the matter in full detail shortly.”
He stated that the Finance Ministry has been going through a detailed and thorough set of reviews with public sector banks, analysed balance sheets closely and understood their capital requirements now and for the future understand regarding Basel norms.
The government is fully committed to supporting the nationalised banks. But capital is just one aspect, governance, management, operating autonomy, helping on NPA are all important elements of supporting public sector banks, he said.
“We will be able to put in place a comprehensive solution for public sector banks.”