Harnessing data through DPI to build credit worthiness and inclusion

December 13, 2023

“We need to harness data through the digital public infrastructure to build creditworthiness and inclusion of small and micro businesses in India which can help them to access easy finance”.

This view emerged at an event organised by CUTS International and Institute for Industrial Development on “Fostering MSMEs and Jobs: Policy Lessons from Experiences of Select Sectors and Clusters”, organised in New Delhi on 13th December.

While speaking on the issue of enabling innovative finance for MSMEs, Amar Patnaik highlighted the role of SIDBI, and indicated that a similar recommendation has been made by the Standing Committee on Finance.

Patnaik also highlighted the need for supporting women self-help groups by way of capitalisation, market linkages and training. This could enable them scale into micro enterprises which could have positive spillovers in their districts.

The speakers also discussed ways to address skill gaps among blue-collar workers of India, enhance their productivity, and examine the integration of Environment, Social and Governance (ESG) framework within the MSME sector. Presentations were made by Satyaki Roy, ISID and Navneet Sharma, CUTS Institute for Regulation and Competition, on this issue.

Gopal Krishna Agarwal, National Spokesperson on Economic Affairs, BJP, highlighted that GST data has the ability to create huge economic credibility and creditworthiness for the MSME sector. Data and technology can be leveraged to create digital public infrastructure for supporting MSMEs, facilitating credit, and enabling adoption of ESG principles by the industry. 

The speakers highlighted significant potential of MSMEs not only in economic terms but also in reshaping India’s societal fabric, suggesting that studying this aspect is crucial alongside its economic impact of MSMEs.

Pradeep S Mehta, Secretary General, CUTS International, highlighted the need to ease compliance burden for addressing challenges faced by MSMEs in adopting ESG practices.

Mehta highlighted the significance of value creation by prioritising investments in worker welfare, a dimension often overlooked in discussions about ESG.

In terms of skilling, Dr. Aruna Sharma, former Secretary, Government of India, and CUTS Distinguished Fellow, suggested that the skills ministry should put individuals as apprentices in MSMEs and pay them stipends for a specified period. This will make them employable, often in the MSME sector and beyond as well.

Nagesh Kumar, Director, ISID, indicated that MSMEs continue to confront critical issues like capital constraints and limited infrastructure access, rendering them vulnerable amid the post-COVID economic recovery.

The speakers also highlighted specific challenges faced by women entrepreneurs and lack of credible data around informal economy, MSMEs, challenges faced and  contributions made by them.

Anil Bhardwaj, Secretary General, FISME, called out the condescending attitude of developed countries of preaching ESG principles to developing countries while continuing to source products from China, guilty of suppressing human rights and democratic voices.

Mr Ram Mohan Mishra, Chairman, Meghalaya Investment Promotion Board, and former Secretary, Ministry of SMEs, GOI cited government initiatives to enhance competitiveness among MSMEs and highlighted that environmental regulations should be carefully structured to avoid negative impacts on MSMEs.

The roundtable involved lively question and answer session between speakers and close to 50 learned participants. In his closing remarks, Mehta indicated that CUTS and ISID will work to address the challenge of using DPI  and design a roadmap to implement suggestions made, and submit the same to the government. This was welcomed by Gopal Krishna Agarwal.

For further details, contact to:
Dr Navneet Sharma, Director General, CUTS,  nas@circ.in , +91 9212723123

Vijay Singh, Assistant Director, CUTS, vs1@cuts.org, 91 8076619084/ +91 9910264084 

Tasmita Sengupta, Research Associate, CUTS, tse@cuts.org , +91 8250690151