The Micro Small Medium Enterprise sector holds the key to an Indian economic recovery. Substantiate (200 Words)
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IAS Parliament 3 years
KEY POINTS
· Among the many indicators, perhaps the most significant is the decline in number of establishments registered with the Employees’ Provident Fund Organisation.
· The MSME sector is vital for employment generation, as also for an economic recovery to sustain. The fiscal stimulus announced to boost employment in the MSME sector as part of the Atmanirbhar Rozgar Yojana, under which the government will bear the entire provident fund contributions for two years of all new employees hired.
· Part of the reason these incentives failed to have the desired impact lies in the very nature of the MSME sector and its heterogeneity, which is inherent in its definition as a residual sector once large enterprises are excluded. It comprises manufacturing but also a large part of services, which remain affected by the pandemic.
· Under the large umbrella of the sector are a variety of enterprises, ranging from single-person outfits to those with more than five workers. A 2015-16 survey of the National Statistical Office shows that almost 94% of these enterprises are tiny, with less than four workers, and about 62% are single-person businesses accounting for 78% of all workers in the sector.
· Only 31% are registered under various acts, but these face regulatory hurdles, some of them related to compliance with the goods and service tax (GST). The sector is India’s largest employer outside agriculture and construction, with 111 million workers. Therefore, it is crucial for any broad-based economic recovery, be it from the supply or demand side.
· However, what has also hurt the sector is the political economy of state intervention, which seems biased in favour of large corporations. With most state governments relaxing labour regulations for large companies, even the low-wage advantage that this sector enjoyed has got diminished.
· Despite its importance, the MSME sector has been denied a level-playing field. It has to bear the brunt of policy-induced shocks, like demonetization and GST, as also natural shocks such as those caused by covid.
· Reviving the sector requires not just fiscal stimulus, but also a political-economy approach that prioritizes MSME interests. India needs to ease the regulatory burden of small units and aid their survival through fiscal support. Above all, they need a level-playing field vis-à-vis big businesses.
Saravanan 3 years
Kindly review
IAS Parliament 3 years
Try to underline key points and provide us headings, include data to support your arguments. Keep writing.
Venkateshwaran R 3 years
Kindly provide feedback. Thank youam/ Sir
IAS Parliament 3 years
Try to include about demographic dividend of India. Keep writing.
Venkateshwaran R 3 years
