MSME sector grew 15-17% revenue in FY 2021-22, comeback likely

After the deadly second wave of the Covid-19 pandemic, the micro, small and medium enterprises (MSME) sector is likely to rebound with 15-17 per cent growth in revenues for the financial year (FY) 2021-22 amid the economic recovery and rise in demand, according to a study by Assocham-Crisil.

In the last few months, the recovery was registered in sectors like construction, exports, commodities and consumption services as Covid-19 restrictions were lifted by state governments.

The growth in FY22 followed the negative development of the area by an estimated 10 per cent in FY21 and 6 per cent in FY20. For the ongoing FY, the growth will be 11-13 per cent, revealed the study named ‘MSMEs Back to the Grind.’

Talking about the MSME credit, it estimated 7-9 per cent growth in FY22 to Rs 18 lakh crore from Rs 17 lakh crore in FY21.

The book growth of banks is likely to be at 8-10 per cent as compared to 5-7 per cent growth for non-banking financial companies (NBFCs) within the lending area, the study revealed.

Amid the hike in lending, asset quality concerns had gone up in the first quarter of 2022 due to the deadly second Covid-19 wave. Also, collections in April and May 2021 had decreased, according to the study.

The study mentioned that the NPA level rose from 16.8 per cent in March 2021 to 18.5 per cent in September 2021. BW BusinessWorld