A change in definition of micro, small and medium enterprises (MSME) has turned India into a country of small businesses as nearly 99% of the entities now fall under the category based on the twin parameters of investment and turnover.
Around 5.70 lakh micro enterprises have been supported with margin money of Rs 12,902 crore giving employment to approximately 47 lakh people as on October 31, 2019, since the launch of the government’s Prime Minister’s Employment Generation Programme (PMEGP) in FY09, according to the government data. The PMEGP scheme intends to boost entrepreneurship by supporting individuals setting up micro-enterprises with loans up to Rs 25 lakh in the manufacturing sector and Rs 10 lakh in the service sector along with 15-35 per cent subsidy for various categories. According to the government’s FY 19 MSME report, out of total 6.33 crore MSMEs in India, 6.30 (99 per cent) are micro-units while only 3.31 lakh are medium enterprises and 0.05 lakh are medium business
To boost employment opportunities, the MSME ministry has also launched a scheme of ‘second financial assistance’ to help the PMEGP and Mudra units expand or upgrade,” MSME minister Nitin Gadkari informed the Rajya Sabha on Monday with the PMEGP data. For manufacturing businesses, the second financial assistance to be given would be up to Rs 1 crore while for service/trading business it would be up to Rs 25 lakh. The subsidy offered here would be 15 per cent while 20 per cent would be for businesses based in hilly states and northeastern region.
To be sure, employment in MSME sector had increased during FY19 with 5.87 lakh jobs, created under PMEGP, from 3.87 lakh in FY18. It had declined from 4.08 lakh in FY17. FY19 jobs increased by close to 52 per cent from FY18 and 44 per cent from FY17. Even as the employment has risen, the MSME sector’s share in GDP and exports have remained stagnant to around 29 per cent between FY16-FY18 and 49 per cent between FY17-FY20 (till August 2019) respectively. The primary reasons for this is “delayed payments from PSUs which has been already voiced through RBI and Finance ministry. The other development that is responsible is demonetisation that halted MSMEs’ growth,” Dr Sanjiv Layek, Executive Secretary, World Association For Small And Medium Enterprises (WASME) had told Financial Express Online.