One year of GST: MSMEs revenue rose 27% in FY18, vibrancy returning to sector, says report

With the first anniversary of the introduction of the new tax regime looming, a study has revealed that revenues of micro, small and medium enterprises surged by 27 per cent and operating profit by 66 per cent in 2017-18, signalling that vibrancy is returning to the sector after challenges posed by GST rollout and to an extent demonetisation. 

The liquidity challenges also appeared to have receded with improvement in the working capital parameters particularly the debtor position which has declined from 100 days as on March 2017 to 78 days as on March 2018, the study of a representative set of 327 MSMEs with rated debt up to Rs 25 crore conducted by Acuite Ratings observed.

"These figures reinforce the belief that the MSME sector is already on a recovery path and should continue to sustain the improved performance in FY19," Acuite Ratings CEO Sankar Chakraborti said.

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"SIDBI's MSME Pulse report jointly released along with TransUnion CIBIL estimates that 5 lakh new borrowers are likely to tap the formal borrowing channels in the first half of 2018 as compared to 4 lakh in the second half of 2017. 

"There is a good pick up in credit to micro and small enterprises in the March quarter and we are hopeful that this will be sustained in the current year," SIDBI CMD Mohammad Mustafa said.

However, Acuite said there is a need to revive fresh lending by public sector banks to MSMEs through specific measures.