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The Small Industries Development Bank of India (SIDBI) survey has revealed that despite deep rate cuts by Reserve Bank of India (RBI), the micro, small and medium enterprises (MSMEs) are still cautious about the future interest rate trends. It said the MSME segment, which is widely called the backbone of the Indian economy, continued to be concerned about the availability of adequate credit as well.

However, the survey said expectations of elevated finance costs persist across sectors, reflecting cautious sentiment about future interest rate trends. On the issue of credit availability, it said that the adequacy of available credit is still a concern among MSMEs. Amid widespread concerns about sluggish growth in private capital expenditure, the small business segment has also said that the higher capacity utilisation is gradually leading to new capex among MSMEs.

It said entities in the segment are also anticipating an improvement in the debtor realisation and feeling that the profitability will be stable going ahead. However, they flagged concerns on the availability of skilled labour, pointing out that this is a ‘structural challenge’ despite the improvements that have happened.