MSME yet to catch up with country’s growth

KOCHI: Micro, Small and Medium Enterprises (MSMEs), where the country has reposed a lot of hope for the future, is yet to catch up with the economic growth of the country.

As per the data made available by Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation, the MSME’s growth in Gross Value Added (GVA), a key measure, has dropped from 15.27 per cent in 2012-13 to 7.62 per cent in 2015-16 (the latest data available on this).

Moreover, the share of GVA contributed by MSME has also dropped from 32.36 per cent n 2012-13 to 31.60 per cent in 2015-16. While the Gross Domestic Product (GDP) of the country has been growing steadily, albeit at different rates, the MSME’s share in country’s GDP has marginally dropped from 29.94 per cent in 2012-13 to 28.77 per cent in 2015-16.

What worries experts in this field is that this is happening at a time when the Central as well as State governments have escalated their efforts and funding for the growth of the MSME sector in India. A lot of programmes specifically designed for the growth of the sector are already on in the country.

However, the contribution of Manufacturing MSMEs to the country’s total Manufacturing GVO (Gross Value of Output) at current prices has remained consistent at about 33 per cent, i.e. at one-third during the last five years.

As per the National Sample Survey (NSS) 73rd round, conducted by National Sample Survey Office, Ministry of Statistics & Programme Implementation during the period 2015-16, there were 633.88 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities.

While 196.64 lakh were in manufacturing, 230.35 lakh were in trade, 206.84 lakh were part of other services, 0.03 lakh were part of non-captive electricity generation and transmission.

Again, coming to the geographical distribution of these units, out of the 633.88 lakh estimated number of MSMEs, 324.88 lakh MSMEs (51.25 per cent) were in rural areas and 309 lakh MSMEs (48.75 per cent) were in the urban areas as is evident from the numbers.

The micro sector under the broader MSME, with 630.52 lakh estimated enterprises, accounted for more than 99 per cent of total estimated number of MSMEs. Small sector with 3.31 lakh and medium sector with 0.05 lakh estimated MSMEs accounted for only 0.52 per cent and a miniscule 0.01 per cent of the total estimated MSMEs respectively, according to the CSO statistics.

Out of the 633.88 lakh units, 608.41 lakh (95.98 per cent) MSMEs were proprietary enterprises. There has been overwhelming predominance of male owners in proprietary MSMEs. Thus, for proprietary MSMEs as a whole, male owned accounted for 79.63 per cent of enterprises as compared with 20.37 per cent owned by female.

There was no significant deviation in this pattern in urban and rural areas, although the dominance of male-owned enterprises was slightly more pronounced in urban areas as compared with rural areas (81.58 per cent as compared with 77.76 per cent).

The State of Uttar Pradesh had the largest number of estimated MSMEs with a share of 14.20 per cent of such units in the country as of 2015-16. West Bengal comes as close second with a share of 14 per cent. The top 10 states together accounted for a share of 74.05 per cent of the total estimated number of MSMEs in the country.

Worldwide, the MSMEs have been accepted as the engine of economic growth for promoting equitable development. In India, It is estimated that in terms of value, MSME sector accounts for about 45 per cent of the manufacturing output and around 40 per cent of the total exports of the country.

MSMEs play an important role in export promotion of the country. “To maintain its niche in the international and global markets, MSMEs are required to remain globally competitive. They have to continuously update themselves to meet the challenges emerging out of changes in technology, changes in demands, emergence of new markets, etc.” the CSO office observed.

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