Question

Critically evaluate the government policy towards small scale industries .

22 Sep 2022
Answer :
Word Count : 975

Small business sector finds it difficult to raise loans. Therefore, the Governments’ policy provides for a preferential treatment, in respect of financial assistance to small business.

As such, 10% of total credit to be advanced by public sector banks should go to small scale business units.

However, there has been no special help to the small scale sector; as this provision is rather inadequate.

A significant development in the field of extending special financial assistance to the small business has been made with the establishment of SIDBI; which is the principal institution for the promotion, financing and development of small business in India.

SIDBI has been formed for meeting the long standing demand of the small sector for a separate bank to cater exclusively to its needs. SIDBI was established in 1989 under the absolute ownership of the Industrial Development Bank of India. It started working with effect from April 2, 1990.

Functions of SIDBI:

Main functions of SIDBI are:

(i) It provides financial assistance to small industries for:

1. purchase of machinery and

2. technological upgradation

It also supplies machinery to small industries on hire-purchase system.

(ii) It provides assistance for working capital requirements ___ _______ _________ ____ __________ ________ _____ _______.
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