Role of MSME in Indian economy

The Government of India introduced Micro, Small and Medium Enterprises in agreement with the Micro, Small and Medium enterprises development act of 2006. Predominantly these enterprises engage in producing, manufacturing, processing, and preserving goods and commodities.


Also referred to as the backbone of the country next to agriculture. They play a dominant role in contributing to the country’s GDP, manufacturing output, and the country’s exports.


The enterprises generate a lot of employment opportunities thereby helping bridge the gap between unemployment and poverty; also paving the way for the development of the rural areas in the country.

They have helped industrialization in these areas with low capital cost compared to large industries. In complementary to the large business sectors, MSMEs have a major part in the country’s economy, thereby helping in the socio-economic development of the nation.


They produce and manufacture both for domestic and international markets. So much advancement and product improvement has been seen in the khadi and coir industries. The upbringing of rural areas has been one of the major outcomes of the MSMEs collaboration with the various ministries and State Governments.
To be precise the 6.3 crore MSMEs are not only contributing one-third to the nation’s GDP but also help in the employment of the population in the non-formal sector.


The MSMEs play a major role in the transformation of India from an emergent power to a reputable financial center. Not wrong in saying that the MSMEs will be the gear in the wheel for this journey.


Importance of MSME for the economy


Throughout the world, the MSMEs have been accepted to be a major means of economic growth and for the promotion of justifiable development. The rate of growth in the highest rate is from the MSMEs.

Requiring Low investment for setting up, flexible operation, and the ability to develop the native technology accordingly are few major reasons that MSMEs have for having taken India to greater heights.
The second-largest employment generating sector next to agriculture, employing about approximately 120 million people.


MSME ministry targets to increase the GDP to 50% due to their contribution by the year 2025, as India moves ahead to become a $5 trillion economy.


At present, they contribute about one-third of the GDP which is 6.11% from manufacturing, and about 24.63 from the MSME service activities of the 45 lac units across the nation.


MSMEs contribute about 45% of the overall exports.
By specifically employing the people in weaker sections of the rural society, the MSMEs promote all-round development through the provision of employment opportunities.


Opportunities to utilize banking services and products are encouraged to be used by MSMEs in tier 2 and tier 3 cities thereby an additional way wherein the amount can be used in the inclusion of the final economy contribution.


MSMEs encourage innovation in budding entrepreneurs to build new products thereby boosting the growth and help in fueling the economy.


COVID-19 and its impact


MSME’s play a crucial role in realizing the vision of ‘Aatmanirbhar’ or self-reliant India. It was also one of the hardest-hit sectors due to the COVID -19 pandemic as the supply chains in world trade took a major jolt and came to a standstill. The government has been lending helping hands to regain the momentum in these sectors, knowing that prioritizing the development of these sectors is critical to the overall development of the Nation. As much as the Government provides support to these sectors, the benefits can be utilized only if the Business is registered as MSME under the MSME act.
An economic package was proposed to regain the momentum, about 20 lac crores almost 10% of the GDP was brought in to help all sectors including the farmers, middle-class people, industrial units, and MSMEs.


LOAN TO MSME

  • Around two lakh MSMEs would be benefited from the 20,000 crore subordinated debts announced for MSMEs.
  • A collateral loan of three lac was provided with a tenure of four years.
  • The definition of MSMEs was changed which now included turnover as one of the parameters in addition to investment. Micro units can have a 5 crore turnover, with no global tender for up to 200 crores and any pending payment to the MSMEs to be made in 45 days.
  • A 12month moratorium on the loans and a 100% credit guarantee cover to be provided as well. These loans were provided until October 31st this year. Close to 45 lac MSMEs were supposed to be benefitted from this.
  • Global tenders up to 200 crores were banned in any Government venture, as foreign companies are bright competitors and use unfair practices to procure the opportunities. The result of which Indian MSMEs falling prey to such international giants. Banning these will help enhance the vision of a self-reliant India and also enable ‘make in India’ to come true sooner.

As the Government now highlights the role of MSMEs in enhancing exports and thereby making our country self-reliant, the need to import from China will stop. These were the Union Minister, Nitin Gadkari’s thoughts that echoed in his meeting .

Being self-reliant already being implemented in industries such as automobile and agriculture, solutions have been seemingly found and the need to import from China has certainly not been seen as a necessity. The results of which were seen sooner as India was now observed to export a lot than importing.


He also said that as far as Indian policies are concerned, our way of technology acceptance, reducing the production cost and providing products of good quality, the young talented manpower in the country is no doubt the strength behind the achievement of self-reliant India.


With the majority of countries not interested to be dealing with China currently, rather providing an advantageous situation for us; as they are rather interested in doing business with India. A great opportunity for the manufacturing sectors to scale up capabilities to boost exports and thereby contributing to the increase in the economy.


With positive trends showing lesser imports from China and greater exports, the minister added that MSMEs are doing a great job despite facing an economic crisis. He also added that the Government had sanction 93 schemes and over 100 schemes are in pipeline would be cleared sooner to pave the way development of MSMEs.


Certain areas that could boost the development of MSMEs at a quicker rate would be below

  • Artificial intelligence
  • Robotics
  • Using the waste to make something useful (in short waste to wealth)
  • Sustainability
  • Virtual reality-based solutions
  • E-mobility
  • Development of smart villages.


If we see notable developments in the above areas that could be an added advantage for us.


A lot of collaborative projects like centers of excellence are being set up across the nation. These projects are being set up across the IITs and NIITS which are one of the premier educational and research institutes. This would help ignite younger minds and also pave way for numerous budding entrepreneurs.

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@Sindhu Vinod Narayan. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links used, provided that full and clear credit is given to Sindhu Vinod Narayan (Thatmadrasmom) with the right and specific direction to the original content.

5 reasons why women should start investing

Gone are the days when men were the only earning members and the finance minister of the house. We now live in a period wherein men and women play an equal role in working to raise the standards of the family and also help provide a better lifestyle. So if both work hard the odds of leading a high-quality standard of living are guaranteed, once they earn, how to plan on the expenditure and investments is all together with a bigger subject that needs more knowledge.



We surpassed the period where men decide the expenses and allow the budget for household expenditure. The world we now live in wholeheartedly accepts or to put it better believe that women can handle finance equally or should I say much better.



The world of smartphones gives her easy access to buy a gold bond if she wants to invest in gold. Not only that gone are the days where it’s difficult to know how to make money or how to invest. All this is now available at her fingertips just by a click or by asking a query( thanks to Alexa and Siri). Shoot the query and within a blink of an eye, you get results and solutions. It’s now even easier to get certified in the financial sector with the wide range of courses available online through various learning portals. Women can not only equip themselves with knowledge but also start making money by investing and saving. Not to forget that life and medical insurances can also be applied with a click from an app.

The modern world truly opened doors wide for women of this age to explore the world of finances from the comfort of home.



Since women are much better to handle situations and multiple events happening they also forecast long-term plans and can make better investment plans to improve the quality of lifestyle and achieve future goals.



Here are the hows and why I urge women to start investing.


Future goals: Women always think ahead be it the five-year plan or a ten-year plan. They make the blueprints and work on achieving the goal. Improving the quality of lifestyle, acquiring properties, higher education, vacations, and whatnot. Ask her what she wishes for in the future you will get your answers in a jiffy and that too with proper planning and priorities sorted. This is ideally the goal most women have be it someone who works in the corporate or a housewife who helps manage the home.



Learning about investment: Online classes are not only for school-going kids these days but also for adults. Virtual learning opened doors to many fields including finance. Learning centers, youtube, and dedicated Facebook and what’s app groups are now becoming better options to kick start financial learning. Doing this will not only enable you to manage finance at home but could also open doors to various job opportunities which would mean extra income to save more.



Advisors: If managing it on your own is a situation that happens not to worry when you have experts in the field to guide you through the process of selection of investing in where and what. It is completely ok to not know the technicalities and how-tos of investing and take help from experts. As long as your goal is met, this is not something to be worried off.

But make sure to convey what your goal is and how you plan to achieve meaning the milestones that you would want to see before the final goal.



Being financially independent: Every woman working or no, married or single must be financially independent. Unforeseen events can happen anytime with no warning. This could be a recession, loss of property, theft, or even problems in the relationship. If you are financially independent there is nothing to worry off, as long as you can take care of the situation on your own and not sit and brood thinking that you are hopeless and need money.



Better investor: Studies on comparison between man and woman bring out results that women are willing to access risk, patiently learn the how-tos, and not expect quick outcomes. This slow but patient approach marks them separate as better investors than men. They don’t choose shortcuts but are willing to take the longer route to attain their goal.

The lockdown last year saw a lot of women giving wings to their entrepreneurial spirit and give it their best. Supporting them gave me a lot of happiness. Though I’d say that I gained no monetary benefit, the feeling of uplifting people definitely is something above money. But don’t let that die out your dreams.



So if you are someone who is still depending on your better half for finances, there is no much better time than now for you to make the decision. Take smaller steps, take the time to gain expertise, explore the opportunities, choose the best of what suits you, invest, save and live a carefree life and the life of your dreams. Be financially independent and make the world yours.

Saving is an important habit that can be cultivated over time. What matters is to get started and be cautious of how the money is spent.

This post is a part of Blogchatter Half Marathon.’ 

This blog post is part of the blog challenge ‘Blogaberry Dazzle’ hosted by Cindy D’Silva and Noor Anand Chawla.

COPYRIGHT NOTICE –
@Sindhu Vinod Narayan. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links used, provided that full and clear credit is given to Sindhu Vinod Narayan (Thatmadrasmom) with the right and specific direction to the original content.