MSMEs - A Catalyst for The Growth of Indian Economy

After seven decades of independence, India’s phenomenal economic growth is admirable. Economic liberalization is working miraculously for the country, and its outcome is also worth appreciating. Today India is on the verge of economic superpower, and in the arena of international business, today India is one of the most favourite countries in the world for doing business. Micro, small, and medium enterprises (MSMEs) are always a key economic driver for the country. Since independence due to political and administrative will power MSMEs are doing magnificent progress and working as a catalyst in the growth of the Indian economy. Growth and future prospects of MSMEs in India are magnificent. In the present scenario, MSMEs are crating abundant employment opportunities at a meager cost of capital, preparing dexterous human resources, and eliminating regional inequalities.

According to the released annual report 2018-19 by the Ministry of MSME, in 2015-16, there were 633.88 lakh unincorporated non-agricultural MSMEs in the country engaged in different economic activities. Out of 633.88 lakh MSMEs, 196.95 lakh MSMEs were engaged in manufacturing, 0.03 lakh MSMEs were engaged in non-captive electricity generation and transmission, 230.35 lakh MSMEs were engaged in trade, and 206.85 lakh MSMEs were engaged in other services. The important thing is that out of 633.88 estimated number of MSMEs, 324.88 lakh MSMEs (51.25%) were in rural areas, and 309 lakh MSMEs (48.75%) were in the urban areas. In the matter of state-wise distribution of MSMEs in India, with 89.99 lakh MSMEs Uttar Pradesh is a leading state in the country followed by West Bengal (88.67 lakh) and, Tamil Nadu (49.48 lakh).

How MSMEs are Working as a Catalyst for the Growth of the Indian Economy?

Undoubtedly, MEMEs are a bonanza for the developing economies. And its development is directly proportional to the growth of the economy. In India, MSMEs are fuelling the GDP growth, bridging the socio-economic inequalities, and also flourishing entrepreneurship culture in the country. Therefore, in this section let’s discuss the positive impact of MSMEs on the Indian Economy.

MSMEs help to boost the economy of the developing country and also play a pivotal role in creating employment opportunities. According to the National Sample Survey (NSS) in 2015-16, MSMEs have created 11.10 crore jobs (360.41 lakh in manufacturing, 387.18 lakh in trade, and 362.22 lakh in other services, and 0.07 lakh in non-captive electricity generation and transmission).

MSMEs play a significant role in the GDP growth of the country. Now MSMEs are widening their domain across different sectors, producing a diverse range of products and services to meet the demand of the domestic and global market. According to the Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation, the share of MSMEs in the GDP growth of the country in past few years are below:

Nowadays MSMEs are working in a range of sectors including Electronics, IT/ITES, Media, Healthcare, Pharmaceuticals, Automotive, Chemicals, Textile, Renewable Energy, Food and Agriculture, etc. According to the MSME annual report of Financial Year, the total production of the MSME sector has increased from Rs 8685.44 billion in 2006 - 07 to Rs 11769.39 billion in 2011- 12.

Technology disruption in recent years and the digital push from the Government have stimulated the germination of entrepreneurship culture in the country. Now people from the hinterland are empowering their entrepreneurship dream. Today due to the evolution of MSMEs, budding micro-entrepreneurs are emerging from urban and rural areas. Easy access of internet, low internet charge, and uptick in smartphone sales have allowed people to uplift the level of their business.

In a developing country like India, the role of MSMEs is very crucial, not only in the matter of creating employment and GDP growth; rather the establishment of MSMEs in rural and backward areas prevents the migration of people, bridge socio-economic inequalities, and stimulates entrepreneurship. Therefore, to get the effective outcome of MSMEs, its equal establishment is necessary in urban and rural areas.

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