The advent of 2018 has been a bed of roses for the Indian economy. The GDP expanded by 7.2% year-on-year in the last three months of 2017, regaining the title of world’s fastest-growing major economy surpassing the economic rival China by a long margin. Interestingly, it is the strongest growth rate since the third quarter of 2016, boosted by a jump in investment and public spending.
Overwhelmed by Prime Minister Modi’s initiatives, the World Bank recently stated an expected growth of 7.3% for 2018-19, which is not easy to maintain in an economy where more than 5 crores individuals are employed in Micro, Small and Medium Enterprises.
It is startling to note, in terms of contribution to the GDP-MSME sector forms 8% of GDP and it has an annual budget of more than 6.5 thousand crores.
Have a look at the big crunch share of MSME in manufacturing, exports and employment sectors in India:
From the above data, it is obvious that with a share of 40% in the manufacturing sector, 45% in export and 69% in generating employment, MSMEs are the backbone of our economy.
Let’s assume you have a small business employing few workmen and you are willing to get MSME certification to obtain government initiative benefits. For standing under the umbrella of MSMEs, Finance Minister Arun Jaitley recently amended the MSME definition while putting forth his esteemed budget. He stated, “a business with revenue of as much as Rs 5 crore will be called a micro-enterprise, those with sales between Rs 5 crore and Rs 75 crore will be deemed as small and those with revenue between Rs 75 crore and Rs 250 crore will be classified as medium-sized enterprises”.
What initiatives has the government taken?
The government has adopted a vivid range of initiatives for MSMEs including the major ones like:
- Easy online registration is available to obtain MSME certification.
- Finance minister Arun Jaitley proposed to cut the corporate tax rate to 25% for companies with annual revenue of up to Rs250 crore.
- The budget also earmarked Rs 3 trillion for 2018-19 under the Pradhan Mantri Mudra Yojana or Mudra scheme
- Mr Jaitley allocated Rs 3,794 crore for credit support, capital and interest subsidy to MSMEs.
- Public Sector banks have been advised to achieve a minimum 20% year-on-year growth in credit to the SME sector.
More said than done, the government has to look at lack of planning by small businessmen. The absence of hand-holding at every step, essential for business success, is proving to be a bane for MSME start-ups.
Now approach an ordinary-Indian and ask him about the Ministry of Micro Small and Medium Enterprises. You’d be surprised to see a clueless face about the existence of any such government organ.
There is a saying which goes as:
“Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity”
MSMEs entrepreneurs had a fair share of ignorance of such golden advice.
If World Bank expects a 7.3% growth in 2018-19 then it is government’s duty to make common people aware of MSMEs initiatives and help them grow. In the light of target, entrepreneur’s relative experience is what our government should ultimately focus on, rather than allocating huge funds and make developments on paper.
Let’s keep the fingers crossed and hit the sky-rocketing GDP with MSMEs being the major growth contributor.
Author | Kshitij Chitransh