MSME is the pillar of economic growth of many developed and developing countries in the world, playing a prominent role in terms of generation of employment opportunities. MSME has employed more than 50 million people, balancing the distribution of wealth, and contributing to India’s GDP. Despite infrastructural problems and lack of proper market linkages, it has created a great impact in the sector. The improvement in the working capital parameters has also eliminated the liquidity challenges associated with the sector.
“MSME sector is already on a recovery path and should continue to sustain the improved performance in FY19. Jointly releasing a report along with TransUnion, it estimates that 5 lakh new borrowers are likely to tap the formal borrowing channels in early 2018 as compared to 4 lakh in late 2017,” shares Sankar Chakraborti, CEO, Acquite Ratings.
Advantages
MSME sector helps in creating employment on a large scale as the sector requires less investment. It also helps in reducing the employment and underemployed problems, creating a large scope for people to invest in the sector. Moreover, this sector has the capability to survive all threats emerging out of still completion from both domestic and international market.
MSME, being the second biggest employer sector after agriculture, contributes about 45% to manufacturing sector and 40% to exports. The share is immensely instrumental, contributing around 69% to India’s employment sector of India.
Creates Large Employment Scale
MSME creates huge employment opportunities as the enterprises falling in this sector require low capital for a business. The sector is regarded as a boon for many, offering job opportunities, as India witness 1.2 million graduates every year, of the total about 0.8 million are engineers.
Economic Stability
Being a significant growth driver in India, MSME contributes 8% to GDP. MNCs are buying semi-finished and auxiliary products from small enterprises seeing the kind of contribution of MSME to manufacturing, exports, and employment sectors. It helps in creating a linkage between MSME and big companies, increasing the government revenue by 11%.
Inclusive Growth
Due to unequal distribution of wealth in India, Ministry for Micro, Small, and Medium-sized enterprises have inclusive growth on top of their agenda for several years. Poverty and deprivation, including marginalized sections of society, are key challenges lying before the Ministry of MSME.
Cheap Labor
Retaining human resources through an effective human resource management has always been a key challenge for large-scale companies. But in MSME, the requirement of labor is less which reduces the expense incurred by the owner.
Role in Make in India
MSME being the backbone in making the Make in India campaign a huge success, incorporating a new business has been made easy. The government is directing the financial institutions, lending more credit to enterprises in MSME sector.
MSME is among the most important sector, contributing to the growth of the nation. It leverages exports, creating huge employment opportunities for the unskilled, fresh graduates, and underemployed.
