ROLE OF MSME’s IN ECONOMIC GROWTH OF INDIA

*Dr. Archana Sethi

Astt. Prof., SoS.in Economics ,Pt. R.S.U. Raipur

** Praveen Verma

Research Scholar, SoS.in Economics ,Pt. R.S.U. Raipur

Abstract: In this paper, secondary data of MSME’s annual report is used to analysis the different aspects of MSME’s and its role in the Indian economy. We can see the huge growth in number of MSME’s in 2005-06 due to MSME’s act 2006 implemented, which increases the coverage of number of enterprises by properly defining the criteria of MSME’s. MSME’s also contributed very highly in total export of the country. Data suggested that most of the enterprises registered under MSME’s act are fall under the micro and small category and very few enterprise are under medium category within it. Male female participation ratio is also analyzed state wise in this paper  some northeastern states like Manipur, Meghalaya, Mizoram, Nagaland are doing very good in male female participation ratio.

Key Words: MSMEs, investment, employment generation ,GDP.

Introduction

Small and medium enterprises are the backbone of industrial development. It is very important for both developed and developing country small and medium enterprises always represented the model of economic development, which emphasized high contribution to domestic production, significant export earnings, low investment requirement, employment generation, effective contribution to foreign exchange earning of the nation with low import-intensive operations. The MSME’s sector employs about 42 million persons in over 13 million units throughout the country. There are more than 6000 products, ranging from traditional to high-tech items, which are being manufactured by the Indian MSMEs. Ministry of Micro Small & Medium Enterprises contributes Nearly 8% in GDP, 40% in manufacturing output and 45% in exports.

              India’s MSME’s has appeared as an energetic and dynamic sector for the economy. MSME’s are playing a key role increasing a huge amount of employment at meager cost of capital in comparison to large industries, helping in establishment of industries in economically backward regions and truncating, regional inequalities, promising ,justifiable dispersion of national income and wealth. In this paper attempted to examine the contribution of MSME’s sector in the nation’s growth and also the areas which are required to strengthen the MSME’s sector to its continuous contribution to the development of India.

 According to new government classification and definition MSME is considered on the basis of investment and annual turnover.

 Objectives

1.To stydy the current status of MSMEs in India.

2.Analysis the Performance and Contribution of MSMEs in India.

 Research Methodology

The present research is based  secondary data collected from the MSMEs annual report 2017-18.All the Indian state and UT are divided in to 6 different zone according to geographical location of the state in India’s map. In the above data all the Indian states and UT are divided under 5 zones which are central India (2 states), eastern India (5 states and UT), north India (10states and UT), northeast India (8states), south India (6 states and UT), western India (5 states andUT).CentralIndia (Madhya Pradesh and Chhattisgarh) Eastern India (Odisha, WestBengal, AndmanNicobar, Puduchery, Jharkhand ) Northzone (Bihar, Haryana, Punjab, Himachal Pradesh, Rajasthan, Uttrakhand, Uttar Pradesh, Delhi, J&k and Ladakh, Chandigarh) Northeast India (Arunachal Pradesh, Asam, Manipur, Meghalay, Tripura, Sikkim, Mizoram, Nagaland) South India (Andhra Pradesh, Kerala, Karnataka, Tamilnadu, Telengana) Western India (Maharashtra, Goa, Gujrat, Dadra Nager & Haveli and D&D., lakshadweep).

 Review of Literature

Garg& Walia (2012) analysed Micro,Small & Medium Enterprises in post Reform India:Status & Performance.He suggest government policy should promote MSME’s by helping them to increase their efficiency and competitiveness within a market driven economy. Raravi ,Bagodi & Joshi (2012) analysed investigation of barriers for the growth of small and medium scale units of India.They found that some significant barriers like demand and credit restraints,financialproblem,defective machinery and labour problem. Sumandahiya(2015) analyse the growth and performance of MSME’s in India:Prospects and Problem.He point out this sector needs support of the financial institutions and government to overcome theproblems and to become the major contributor to the development of Indian economy.

Role of of MSME^’S Sector in India

The MSME’S are backbone of the Indian economy and have been engines of economic growth in India. The MSME’S have been contributing to expansion of entreeneurial culture through business innovations.It is admitted that almost 17% of MSME’s are engaged in repair and maintenance type of work and it also highlights that ancillary unit constitute 3% of the total MSME’s sector of India. MSME’S provide repair and maintenance support of machineries used by large manufacturing enterprises. MSME’s provide raw-material to large enterprises. MSME’s fulfill innovation needs of large enterprises.(Pataka&das)

Table- 1

Role of of MSME^’S Sector in India

Source;MSMEAnnualReport2017-18.

Table 1 shows the number of actively working MSME’s enterprise since 2001 to 2016 with number of persons employed in the MSME’s  sectors in India the same time period according to the MSME Annual Report2017- 18  data.According to this we can broadly say that since 2001 to 2005 the average  number of labour employed in the MSME sector is 2.38, which slightly goes down to 2.22 from 2006 to 2010. Then after it again start growing up with very small pace from 2010 to 2014 and then shows a significant deep in 2015 which is 1.75 workers employed    in per MSME’s.

                                                                            Figure-1

We can also see the significant growth in market values of the MSME’s in the 2005- 2006 to 2006-2007 due to implementation of MSME’s act 2006 which widened the coverage of number of enterprise by properly defining the MSME’s. Therefore the number of enterprises and market value of MSME’s shows a hike in this data.

Table- 2

Exports of MSME^’S Sector in India

                             Source:Ministry of Finance(2016)Economic Survey

Table 2 show the contribution of MSME’s sector in total exports of India. percentage of MSME’s export increase from 34.1% in 2001 to 49.8% in 2015. MSME^’S share 45% of the total exports.

Table- 3

Total MSME^’s  India(zone wise)in lakh

Source;MSMEAnnualReport2017-18

Figure -2

 In the above data all the Indian states and UT are divided under 5 zones which are central India (2 states), eastern India (5 states and UT), north India (10states and UT), northeast India (8states), south India (6 states and UT), western India (5 states and UT).

According to above table 3 we can inferred that central India which includes only 2 state MP and Chhattisgarh has 35.22 lakh MSME’s, eastern india which includes 5 states has 159.04 lakh MSME’s, South india which include 6 states has 172.49 lakh MSME’s, North india which includes 10 states has 199.48 lakh MSME’s shows that all this zones are doing well in promoting and facilitating MSME’s sector but on the other hand side northeast India which includes 8 states has only 20.91 lakh MSME ‘s  and western India which includes 5 states such as maharastra has only 48.78 lakh MSME’s. Northeast India zone is worth performing according to data followed by western india.

Table- 4

Micro Enterprises in India(zone wise)in lakh

                                                             Source;MSMEAnnualReport2017                                                                                                            

 Table 4 represent zone wise micro enterprises distribution data shows more detailed analysis of previous data.Central India which includes only 2 states MP and Chhattisgarh has 35.22 lakh total MSME’s enterprises out of which 34.9 lakh enterprises fall under Micro enterprises category of MSME’s ACT 2006.Easter India which includes 5 states has 159.04 lakh total MSME enterprises out of which 158.6 Lakh enterprises came under micro enterprises category of MSME’s ACT 2006.North India which includes 10 states has 199.48 lakh MSME’s enterprises out of which 198.1 lakh MSME’s enterprises fall under micro enterprises category of MSME’s act 2006.Northeast India which includes 8 states has 20.91 lakh MSME’s enterprises out of which 18.9 lakh MSME’s enterprises fall under micro enterprises category of MSME’s ACT 2006.

Table- 5

Small Enterprises in India(zone wise)

                                                          Source;MSMEAnnualReport2017-18

Figure -3

 South India which includes 6 states has 172.49 lakh MSME enterprises out of which 171.76 lakh MSME enterprises fall under micro enterprises category of MSME Act 2006.Western India which includes 5 states has 48.73 lakh MSME enterprises out of which 48.6 lakh MSME enterprises fall under micro enterprises category of MSME Act 2006.

We can inferred from here that majority of all the MSME enterprises are fall under the category of micro enterprises which mean units had investment criteria of up to Rs. 10 lakh for service MSMEs and Rs. 25 lakh for manufacturing.

Table 5 shows the zone wise distribution of small enterprises of MSME.Small enterprises means had invested 25lakh

to 5 cr. in manufacturing sector and 10 lakh to 2cr. Service sector.

Table- 6

Total Medium Enterprises in India(zone wise)

                                                     Source;MSMEAnnualReport2017-18

Table 6 shows the zone wise distribution of medium scale enterprises. Here we can clearly see that out of 6 zones only 3 zones which are central india, eastern india and north india has very less numbers of medium scale enterprises and rest 3 zones like northeast india, south india, western india does not have any medium scale enterprises according to this data. Whereas some  definition has be changed in recent time which also broader the scope of MSME’ act so that some fundamental figure changes  may noticed in recent time Data.

                                                                 Figure -4

                                                                                     Table- 7

State-Wise  Female and Male Employees (lakh)

Source;MSMEAnnualReport2017-18