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India needs to rebuild its pandemic-hit MSMEs, says Pronab Sen

KOLKATA: Even as the big corporate sector has been growing steadily over the past few years, India needs to rebuild its pandemic-hit micro-small and medium enterprise (MSME) sector to achieve sustainable economic growth, former chief statistician Pronab Sen said.

We have to build the MSME sector back better.

 Let's build it better than what it used to be", Sen said Tuesday evening in Kolkata at an event of 

Bandhan Bank

 to mark its 7th anniversary. "Although corporate India is growing very strongly, the non-corporate sector is not – in fact, it is damaged", he said while delivering an address on `build back better -- the role of finance".

He argued that it's the non-corporate sector which create.

To support MSME, he called for strengthening the architecture of India's financial system through a greater partnership between banks and non-banking financial institutions (NBFCs). "Banks are essentially deposit taking institutions while NBFCs are essentially lenders. Banks' ability to apprise projects, especially small projects, is extremely poor," he said.

The relationship between a bank and an NBFC should not merely be of a lender and a borrower as it is today, each of these entities need to leverage their core competence," he said, adding that this would ensure financial architecture to work better.

To be sure, the Reserve Bank of India in 2020 allowed banks and NBFCs to co-lend to the priority sectors such as agriculture; MSME, education and housing.

Sen's perhaps underscored the need for such partnerships gaining.