How solid is the position of MSME, the new thrust area of the Indian economy?
By Manohar Manoj
This time the budget is full of incentives and schemes and many other announcements regarding the MSME sector, it is being talked about making it the future backbone of the Indian economy, yet the path of the MSME sector is not easy. Any small businessman has to face more obstacles than a big businessman like industrial plot, capital, technology, mechanical training, raw material, electricity, transportation, market, government non-cooperation and above all competition from big domestic and foreign industries. Many small entrepreneurs start their business but after doing business for a few years, they succumb to the obstacles mentioned above.This time in the budget, every possible measure has been announced to encourage MSME i.e. small, small and medium industries considering them as the leaders of the goal of a developed India by 2047. Actually many factors are responsible for this incentive given by the government such as the country’s huge population in which youth constitute almost two-thirds, the government’s new policy of giving maximum support to self-employment regarding unemployment, skill development of the unemployed and encouraging the private sector to employ by providing internships and the country’s economy. Keeping in mind the decentralization of production, employment, income, exports and balanced regional growth and development, MSME has now become a very important component of the upcoming national development strategy for the government. It was visible in this time’s budget that the government wanted to launch a multi-level incentive package for small and medium industries comprising of raw materials, machinery, finance, market, training and fiscal incentives. Under this, the scope of MSME has been greatly expanded. For example, the investment limit for the small industry has been increased from the current Rs 1 crore to Rs 5 crore, the investment limit of the small industry has been increased from the current Rs 10 crore to Rs 50 crore and the investment limit of the medium industry has been increased from the current Rs 50 crore to Rs 250 crore.In this sequence, the new announcement is that the service and manufacturing industries have been completely placed under MSME in their investment limits, for which all the facilities and incentives will be provided to them.
The third important announcement is that all supply orders given to the MSME sector will have to be paid within 15 days and a maximum 45 days, otherwise, the tax liability of the firm placing the order will be confiscated.In this sequence, the maximum loan limit given under the much-publicized Mudra Loan Scheme of the Modi government has been increased from ten lakhs to twenty lakhs. This loan has been divided into three categories child, adolescent and adult, in which different levels of self-employment business can be promoted. Most importantly, around one lakh startup entrepreneurs created in the country have now been exempted from angel tax. There seems to be no identity among them. For example, apart from the MSME Ministry, the Skill Development Ministry, Youth Development Ministry, Food Processing Ministry, Cooperation Ministry, and Planning Ministry all act as nodal agencies. Apart from this, the Labor Ministry and Finance Ministry keep providing advice, guidelines and encouragement from their respective sides. In such a situation, it is very important to create a window for all government support from registration to MSMEs.If we look at the complete picture of small, small and medium industries in the country, the total number of registered MSME industries in the country is 3.64 crore, under which about 16 crore people are earning their livelihood, which is about 40 percent of our total labor force. In these, 38 percent of the total production of the manufacturing sector of the country and 45 percent of the export sector is contributed. Its total contribution to our gross domestic product is 30 percent. Let us tell you that after the new economic policy in the 1990s, the debate started rapidly whether due to liberalization and globalization, the remaining small and medium industries of the country will disappear under the shadow of big industries or they will not be able to compete with them. But small, small and medium-scale industries maintained their identity in the country’s economy and also maintained their significant share in production, employment and exports. During this time, we saw that on the domestic industrial scene, where medium industries also survived under big industries, small industries also survived under medium industries and small industries also survived under small industries. If shopping malls come into the service business sector, small grocery shopkeepers will also continue to exist. After the new economic policy, the Inspector Raj which was frequently mentioned in the industries, in some places in the country, small and medium industries became the major victims of it.
This situation is still not completely over. Even today, the rulings and guidelines of different agencies are in place in many service industries, the multi-level licensing system is in place and the weekly collection of local police along with Inspector Raj continues unabated. When the government gave a clear order regarding the real estate sector that police interference in it would be prohibited, then this sector was saved from harassment.In such a situation, the Modi government’s minimum government and maximum governance could not materialize. However, for the first time in the last three decades, small and medium industries are gaining importance in government initiatives and it is expected that the legal and policy initiatives taken regarding the MSME sector in this time’s budget announcement will give it a new shape in the Indian economy.
