B. Yerram Raju

Director, Telangana Industrial Health Clinic Ltd
  • India

About B. Yerram Raju

 Bio brief

Prime interests: Agriculture, SMEs, Banking and Finance, Corporate Governance, Environment and Social Development 

Academic and Professional Career:

YERRAM RAJU B is a PhD (1984) in Commerce and Management Studies from Andhra University and a Post-graduate in Economics (1962) from Sri Venkateshwara University. After a couple of years of corporate experience in textile industry, he joined the State Bank of India as a Probationary Officer (1966) where he took retirement in 1994 as Assistant General Manager. He joined Administrative Staff College of India (1994) where he retired in 2001 as Dean of Studies. He went on deputation to the LBS National Academy of Administration, Mussoorie during 1990,1991, as Professor and Head, Economics Department. He was Head of Institute of Public Enterprise, 1999 on deputation from ASCI and was also the Director, Indian Institute of Economics, and Editor, Asian Economic Review in 2005-06. He was Regional Director, Professional Risk Managers’ International Association, Wilmington (De), Hyderabad Chapter from 2006-13.

Dr. Raju was short term consultant on Agriculture, SME sector, Governance and Risk Management with several state governments and Union Government, UNIDO, and World Bank during the last twenty years. He is Founder-Director, Telangana Industrial Health Clinic ltd (2017- till now).

Author: He is author of fifteen books, of which, four are on small enterprises, over 2000 articles in popular financial dailies, and twenty-five research papers. He was International Man of the Year from International Biographical Centre, Cambridge,1991-92 and won the Teacher of Teachers’ Award, 2008. 'Roots to Fruits - The Journey of a Development Banker' was his last book. 

Email: yerramr@gmail.com/erram@tihcl.org  (www.yerramraju1.com)



Stakeholder Group

Academia Government NGO/Civil Society OECD Other

Recent Comments

Jan 02, 2023

Very well thought out article right in time. I would add that complacence is the enemy of effort to fight the pandemic like some nations seem to be thinking. In the same fashion, putting the issue in chains is also no solution to the humanity of future.

Dec 12, 2022

Creating stable trading relationships that includes all types of services is fraught with more instability than stability. Online boarding of trade between nations that have varying information technology and digital systems is subject to high risks that the emerging nations can ill afford. 

Oct 10, 2022

I agree. The future - climate resilient and sustainable - is in our hands. Let us all join to make it. I agree that all to join is the toughest part, but not impossible.

Sep 26, 2022

I was apprehensive of this new technology delivering the promise. After reading this article and the initiative of OECD, while my doubts are cleared to a large degree, persons of future generations limit themselves to the dictates of the machines and barter their brains. This could also lead to large scale unemployment which has the potential for a revolution. Robos and Robotics may substitute thinktanks. The boundaries that we draw for technology interventions is extremely important for a sustainable future. 

Sep 12, 2022

The author deserves rich compliments for the very comprehensive articulation of issues involved in democracy. In my autobiography, 'Roots to Fruits - The journey of a Development Banker' (2021) I dealt with the issues: Development, Democracy, and Diversity in Indian context. I am in doubt whether I could send the chapter for your kind view and if the author agrees, can go as a response to this article. 

Jul 26, 2022

India's Small Enterprises Need gearing mechanisms

Digitization of the Micro and Small Manufacturing Enterprises

  1. Yerram Raju*

In India 95% of manufacturing micro and small manufacturing enterprises (MSMEs), estimated at 1.6crore are single owner enterprises whether they are proprietary or partnerships.

These MSMEs go through stages similar to biological organisms. Seeds whether they are sown humanly or by birds fight for their growth with worms, ants and insects and sprout. Thereafter they grow as plants and trees. Some give flowers, some give aromatics, and some others give fruits etc. This article discusses the issues relating to the digitization of manufacturing MSE and not the usual connotation of micro, small, and medium enterprises. They are in different typologies: micro, supporting enterprises providing forward linkages to the small and medium-sized enterprises and domestic market-oriented enterprises, and export-oriented enterprises. The last type is not going to be part of the article as they are already digitally transformed.

Digital transformation is the foundation for a sustainable future. It enhances the reach to the customers and markets and enables the supply chains transform as value chains. It helps in realization of the revenues fast.

Enterprise level hurdles

Most MSMEs have rigid mindsets, lukewarm approaches to change and fear of growth. Digitisation transforms such mindsets with ease. For example, the start-up manufacturing micro entrepreneur may be at bay as to where to locate his enterprise – closer to his home, closer to raw materials, closer to a political constituency, or closer to markets or locate where there is ease of starting. If digitised, (s)he can go through a search engine like google or binge and find out which location suits him best even through her/his smart phone or on a laptop if (s)he has one. This happens because of data transmitted through space or cloud technology. (S)he should keep his eyes and ears open – rather, be prepared to listen and learn from surroundings, develop, and keep reviewing business development plans and enhance customer satisfaction through continual improvements in quality of the product. (S)he will be able to produce what the market wants and to the extent required, optimise his resource-use. Knowledge plays a key role. With digitisation, the entrepreneur will be able to do due diligence of the seller of the machinery and raw materials, enter contracts responsibly, and realise sales fast. The entire supply chain management, branding or co-branding, franchising etc., will have the prospect of reaching global standards and markets.

why is digitisation not happening despite a big push by the Union and State governments in MSMEs?

First is cost. Second is access. It is also difficult to reach out to them either through a phone call or message. Third, even after identification of a firm, they lack ability to negotiate the terms of engagement. No MSME can verify or validate a software firm. These are not insurmountable problems, as today’s ecosystem facilitates the digital transformation, like never before.

Ecosystem means covers the effective interaction between various stakeholders of MSMEs both in terms of cost and speed. Policy advocacy, stakeholder interactions, Institutional supports both from the public and private, better communications and incentive delivery system etc are all part of the ecosystem.

Change Movers:

Both the Union and State governments are going all out to support digitisation of the MSMEs. 2.5 lakh villages have been provided with broadband connectivity. Networking has improved. Business to businesses (B2B), Business to government (B2G), Business to Customers (B2C) have acquired speed. Realization of the transactions has become easier with factoring, Trade receivables Discount System (TReDS), for transactions of firms with Rs.100cr annual turnover and above, Government e-market Place (GeMs) portal for procurement of goods and services by the governments, PSUs, and larger firms, and for delayed payments, a Samadhan portal of the Union Government, MSE facilitation Councils of the state governments, and Insolvency and Bankruptcy Code (IBC) resolution for firms with Rs.1crore investment of the MSEs are just examples to mention a few change movers or facilitators.

In addition, RBI has established Account aggregators to resolve the information asymmetry and moral hazard issues of the lenders across the lending institutions – commercial banks, NBFCs and FINTECHs. Just last week, UGROW MD disclosed to Economic Times in an interview that they have lent over Rs.2969 crores to the MSMEs. He did not of course mention whether they are manufacturing or services. But he gave the hope that in the next few years he would cross a lending of Rs.12-13000cr for the MSMEs in the country. He also mentioned that during the next three years, data-based lending will explode. An estimated 70 percent job creation in the MSMEs in the first quarter of the current year is a vindication of the policy thrust by the union and state governments.

Telangana – Prime Mover in Digitisation of MSMEs

Telangana state is unique in the institutional building for strengthening the ecosystem. This is the only state where one can start the industry from day one of conceiving the idea, as all approvals will be delivered on the TSiPASS within less than 15 days and in the absence of receipt of approvals, the approvals are deemed to be given. Telangana State Program for the rapid incentives for Dalit entrepreneurs(TS-PRIDE), We-Hub for women entrepreneurs, T-Hub for start-ups, TS-HART for handicrafts and artisans, insurance for handloom weavers up to Rs.5lakhs like for the farmers, Telangana Academy for skills and knowledge (TASK), the best ranked innovation environment in the state through the state Innovation Council, Research and Innovation Centre of Hyderabad (RICH) and Telangana Industrial Health Clinic Ltd., (TIHCL), the only institution in the country for revival of stressed manufacturing MSEs etc., are autonomous institutions run on transparency and good governance practices. The state has minimum inspections and maximum facilitation for the MSMEs. Uninterrupted power supply to the industry, industrial water, twelve new industrial parks in addition to the existing 25-odd, and Industrial Local Area Authorities.

Case Studies

Let me illustrate with a case study of the TIHCL that assisted 334 MSMEs either through margin funding or non-finance stress resolution, stabilizing employment of around 13000 employees and around Rs. 1000cr capital.

Deccan Pulverisers, located at Talakondapally in Mahabubnagar district, run by a woman entrepreneur, engaged in manufacturing of Silica/potash powder from quartz/feldspar mineral stones, employing 27 workers. There was shortage of working capital funds due to increased investment on construction of factory premises, which was also damaged by a natural calamity and delay in delivery of machinery that further elongated the commencement of commercial operations. Unit became NPA in SFC books. TIHCL sanctioned Critical Asset Funding (CAF) loan which reduced the interest burden for the enterprise by 4% and provided much needed relief in working capital cycle that led to upgradation to standard asset from the NPA status within ten days. The unit that had an irregularity of Rs.24.90lakhs pre-revival with 50% capacity utilized, moved with the TIHCL support to 100% capacity use jumping from Rs.90lakh turnover to Rs.145lakh turnover in six months. Revival could happen because the firm could digitise its operations and allowed us to handhold and monitor till it realised its cashflows projected in the restructuring proposal.

TIHCL is a fully online functioning non-deposit NBFC, registered with good governance and efficient management practices. Anyone can reach with a click of the mouse. It does due diligence in five days and its USP is handholding and monitoring through a low-cost customised and consent-based enterprise resource planning (ERP) architecture set up with the MSMEs they serve. They lend at just 10% per annum interest. They are open to co-lending with interested banks and NBFCs. They have preferred terms for stress release of women enterprises with one percent reduction in financial support, and separate products for revival. Data and due diligence are its strengths. It works with minimum overheads and maximum facilitation from highly experienced team of consultants in financing the MSMEs. It has Memorandum of Understanding with FTCCI, ALEAP, SBI, for effective coordination and with CESS for research studies.

Trust the Entrepreneur

Trusting the entrepreneur is its major strength while it was trust deficit and perceived high risk despite low level of NPAs that detracted the commercial banks to do aggressive lending for the MSMEs. Even as per the Annual Report of the RBI for FY21-22, while the number of micro enterprise accounts declined during the year 21-22 by 38% amount outstanding increased by 8.1%, small enterprise accounts declined by 20.1% with outstanding amount increasing by 9.48%. The medium enterprise accounts declined by 27% while outstanding amount increased by nearly 37%. These figures reflect the continuing hesitancy in adding numbers to the MSME portfolio.

The Way Forward

The way forward lies in easier access through dedicated and state accredited software firms to help the MSMEs digitalise their operations. Advocacy with simple and cost-effective and low-cost package of customised ERP solutions and handholding would pave the way for further progress of this important constituent of the economy that contributes 8% of the GDP and front-ending the supply chains of the larger enterprises in the corporate and mid-corporate categories.

Data builds trust and this data should be reliable and verifiable easily by the stakeholders for rendering quick support and this is possible only through digitisation. Atma Nirbhar Bharat or self-reliant India would be truly competitive when the MSMEs are facilitated to become digitally savvy. We are already one of the largest users of smartphones in the world with leadership in software exports, the first step for digital transformation. Hopefully, the measures suggested above, would transform them fast.

(The views are personal and they have been presented in an interview with ‘nicheBrains’. The author can be reached at yerramr@gmail.com )







Jul 26, 2022

Access to technology by small business firms at low cost and customization should be the focus areas of governance in technology firms because they provide strength to the mid-corporate and large corproate firms. Advocacy and handholding till they stabilise in their supply chains are other important focus areas. 

Jul 09, 2022

The Report and the blog are very informative. Keeping soil health and optimal water use and climate-resilient crop rotation are the key to sustainable farm-to-fork strategies. Technology exchange costs should be kept within the reach of the small farmer in the developing countries to keep the world's goal to no-starvation nation.