MSME sector picks up: Demonetisation impact fades as manufacturing, services performance improves, says survey

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Published: February 22, 2019 6:43:19 PM

Even as headwinds including NBFC liquidity crunch impacted economy, sentiment among micro and small enterprises (MSEs) improved in December quarter of 2018, a survey showed.

Pradhan Mantri Jeevan Jyoti Bima Yojana, Prime Minister Narendra Modi, Suraksha Bima Yojana, Textile Minister Smriti Irani, GST-registered MSMEs, Textile Minister Smriti IraniThe MSME sector is expected to remain upbeat in the next quarter as well, the survey also added.

Even as headwinds including NBFC liquidity crunch impacted economy, sentiment among micro and small enterprises (MSEs) improved in December quarter of 2018, a survey showed. An increase in order book size and employee base for manufacturing MSEs and a rise in profit after tax margin and employee base for services MSEs boosted the sector, the 5th CriSidEx survey shows.

Festive season, rupee depreciation, and a decline in oil prices also helped the small businesses to perform better than the preceding quarter and also a significant improvement for the corresponding quarter a year ago which was still coming out from the impact of demonetisation.

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The sector is expected to remain upbeat in the next quarter as well, the survey also added.

“For January-March, both manufacturing and services MSEs were optimistic of a good business performance. Over 50% of the respondents each from manufacturing and services expected the positive momentum to continue. In the manufacturing space, pharmaceuticals, gems & jewellery, and chemicals, and in services, professional services, traders, logistics and power & power utilities are the most optimistic”, Mohammad Mustafa, Chairman and Managing Director, SIDBI, said.

Employment improved, with MSEs reporting larger additions to their employee base in October- December compared to in July-September. More people expected to add employees in the January-March quarter and only a few respondents intended to reduce headcount.

Meanwhile, Primary Consumer Sentiment Index (PCSI) showed that rising inflation, low liquidity and jobs scarcity has led to a fall in consumer confidence in February. PCSI saw a downward slide, a drop by 0.9 per cent, in consumer confidence this month, according to a study by Thomson Reuters-Ipsos.

“Consumer is downbeat due to rising inflation, lesser liquidity and lack of job opportunities,” said Parijat Chakraborty, Country Service Lines Group Leader, Public Affairs, Corporate Reputation & Customer Experience, Ipsos India.

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