BHUBANESWAR: With another increase in the repo rate, the Reserve Bank of India has shown its stern intent to curb inflation. However, the hike might take a toll on the small-scale industries in the State that depend on bank funds for sustainability. In Orissa, while large and medium industries comprise only 0.02 per cent of the industries, small-scale industries take a lion’s share, with a majority of the `1,233-crore investment in the State going to the small-scale variants. However, with the lending rate being hiked for the 13th time since early 2010, the small-scale industries are headed to take a hit. “The Micro, Small and Medium Enterprises (MSME) will be hard hit with this increase in the repo rate. With a majority of the industries in Orissa being agriculture and cottage-based, it will darken the scenario for growth prospects,” said Bijay Kumar Bose, Managing Director, Orissa State Financial Corporation (OSFC). ”Even if the lending rates are increased, the banks should make provision for rebate for prompt payment, that is, if the payment is made on the due date,” Bose added. The OSFC currently gives a rebate of 0.5 per cent to a standard borrower. With MSMEs drawing a substantial chunk of investment, apart from playing a substantial role in generating employment, overall economic growth of the State might take a pinch with the hike in repo rate. However, impact of the hike on large-scale industries will be less, as they have alternative sources of funding, experts opined. The recent hike has also left the entrepreneurs disgruntled who depend on the banks for funding and might be forced to put on hold plans of further investment till the situation stabilises, sources said.
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