‘It’s high time India creates systematic, periodic database of MSMEs, given latter’s employment potential’

Given the importance of MSME sector from the employment perspective, it’s crucial to gauge the dimensions of the sector, when it comes to enterprises and employment periodically. (Categorical File/Gurmeet Singh)

• By M H Bala Subrahmanya

MSMEs in India account for a substantial proportion of nationwide employment, nationwide revenue, and nationwide exports. Approximate estimates determine them because the second-largest employer (after agriculture), one-third GDP contributor, and nearly half exporters. Due to this fact, their regular emergence, survival, and development should be facilitated on a steady foundation. Indian policymakers outline and refine the definitions of MSMEs periodically to completely assist and promote them by means of different coverage measures at nationwide and state ranges. Nevertheless, a exact description of the dimensions of the MSME sector has all the time remained a problem, within the absence of a periodic information technology system within the nation (much like Index of Industrial Manufacturing (IIP) and Annual Survey of Industries (ASI) for the organized industrial sector). Due to this fact, measuring the change within the dimension of the MSME sector infrequently is subsequent to unattainable. Periodic measurement of the dimensions of the MSME sector when it comes to the variety of enterprises and employment (and even revenue) is of paramount significance to any rising economic system. This assumes important significance in instances of disaster corresponding to the present Covid-19 pandemic, afflicting the nation by means of a wave after a wave.

Until lately, we used to have annual estimates for the variety of enterprises, employment, manufacturing, and exports of MSMEs (for the sector and nation as a complete) from the Ministry of MSME, that are barely adequate to seize the magnitude of influence that an unexpected and surprising disaster would make on MSMEs. They don’t seem to be out there anymore. The opposite statistical supply for the sector is SSI/MSME Census. We had 4 Censuses for the sector to date: three Censuses for Small Scale Industries, previous to the MSMED Act 2006, and the fourth one was performed for MSMEs as per the brand new definition of the sector in 2006. The Census, in fact, coated solely the registered sector and subsequently, estimates had been made for the unregistered sector.

The opposite official supply is the Nationwide Pattern Survey Group (NSSO) which carries out a nationwide survey of unorganized enterprises twice a decade (but it surely excludes registered enterprises). Financial Census is one other official supply that covers all of the enterprises throughout the nation however classifies them beneath two broad teams: (i) Personal-account enterprises, and (ii) Institutions. The previous employs solely family labour and doesn’t rent any exterior labour whereas the latter is run by using no less than, one employed labour. However the institutions aren’t recognized or categorized additional into small, medium, and enormous ones. Additional, none of those sources comprehensively identifies the MSME sector in totality, periodically. Lastly, given the character of the sector, not all of them have to be/are GST registered. This poses a significant problem for any significant evaluation of the change within the dimension of the sector infrequently, notably in instances of disaster corresponding to the present one.

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This brings out the necessity for putting in a dependable statistical information assortment system by the policymakers. Given the importance of the sector from the employment perspective, it’s crucial to gauge the dimensions of the sector, when it comes to enterprises and employment periodically. The system should cowl the whole nation and it should be periodically performed. Clearly, a sector with an enormous unorganized sub-sector inside will pose critical information assortment challenges. However this may be overcome by adopting the next technique. As of 2021, there are 741 districts unfold throughout 28 states and eight union territories within the nation. Excluding the 4 metros – New Delhi, Mumbai, Kolkata, and Chennai – every district is meant to have a District Industries Centre (DIC). DICs are supposed to supply a wide range of assist companies for the promotion of entrepreneurship beneath a ‘single umbrella’ in every district. A few of them have developed and maintained District Industrial Directories comprising the addresses of MSMEs registered with them. It’s this nationwide community of DICs that have to be revitalized for the aim of periodic information assortment of MSMEs within the nation.

Every DIC should be staffed with well-trained discipline personnel who ought to collect discipline information on the variety of MSMEs (by NIC codes) and the variety of individuals employed, as soon as/twice a yr. This can be appropriately supplemented with information on (i) Funding in plant & equipment, (ii) Annual turnover, (iii) Technological – product/course of – improvements, (iv) Patent purposes submitted and/or patents obtained, and (v) Quantum of exports. To start with, this may be performed on an experimental foundation in key SME clusters throughout the nation. Massive cities like Bangalore, Hyderabad, Ahmadabad, and Pune could also be supplied with a number of DICs, for the trigger. Primarily based on the teachings discovered, the technique may be revised and finalized for its nationwide software. Following the IIP and ASI of registered industries, an unique IIP and ASI may be deliberate for MSMEs. Whereas IIP may be bi-annual, ASI of MSMEs may be an annual train. It will show extraordinarily helpful for policymakers on the nationwide and regional ranges in coverage planning in addition to misery administration, aside from empirical researchers, sooner or later.

M H Bala Subrahmanya is the Professor, Division of Administration Research on the Indian Institute of Science, Bangalore. Views expressed are the writer’s personal.