SIGNIFICANT ROLE OF MSMEs IN GENERATING EMPLOYMENT OPPORTUNITIES

[Mr. M. GOVINDARAJAN]

Introduction

The Micro, Small and Medium Enterprises (MSME) sector is playing a highly vibrant role in the Indian economy since the last fifty years. This sector not only contributes significantly in the economic development but also in the social development of the country by generating large employment opportunities.  The capital for such generation of employment is comparatively lower capital cost. This sector is widening its domain across sectors of the economy, producing diverse range of products and services to meet demands of domestic as well as global markets.

Types of employment

There are five types of employment as under-

• Permanent employment or fixed term employment;
• Casual employment;
• Apprentices or trainees;
• Self employment;
• Hired employment in contracts and sub contracts.

Unemployment problem

Unemployment is the acute problem in every country and India is not an exception to this.  The literacy skill is increasing and many professionals in various areas such as Engineering, Doctors, Chartered Accountants, Advocates, Company Secretaries, Cost Accountant, MBA, MCAs besides the undergraduate degrees and post graduate degrees.  There is a rise in unemployment problem proportionate to the raise in the literacy.  The Central Government as well as State Governments is striving to reduce the unemployment problem and also arrange many skill development programs to update their knowledge and experience in all fields. 

Prime Minister’s Employment Generation Program

The Prime Minister’s Employment Generation Program (PMEGP) is the scheme offered by the Central Government for the generation of employment opportunities in our country.  The objectives of PMEGP are-

• To generate employment opportunities in rural as well as urban areas of the country through setting up of new self-employment ventures/projects/micro enterprise;
• To bring together widely dispersed traditional artisans/ rural and urban unemployed youth and give them self-employment opportunities to the extent possible, at their place;
•  To provide continuous and sustainable employment to a large segment of traditional and prospective artisans and rural and urban unemployed youth in the country, so as to help arrest migration of rural youth to urban areas; and
• To increase the wage earning capacity of artisans and contribute to increase in the growth rate of rural and urban employment.

The scheme is a credit linked subsidy scheme in order to generate more employment opportunities in urban as well as rural parts of the country.  Up to 31.12.2019, a total of about  5.7 lakh micro enterprises have been assisted with a margin money subsidy of ₹ 13,033.3 crore providing employment to an estimated 47 lakh persons.

This scheme is implemented by Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs) and banks.

Employment under Khadi sector

The main objective of the KVIC is to provide more employment in rural areas.  The following table shows the employment details from the year 2016 – 17 to 2019 – 20, which shows an continuous increase in the employment-

Employment under Khadi Sector

(Artisan in lakhs)

Year	Khadi Sector’s employment
2016 – 17	4.56 @
2017 – 18	4.65 #
2018 – 19	4.96 #
2019 – 20 (up to 31.12.2019)	4.98 #
2019 – 20 (Projected up to 31.03.2020)	4.99 #

@ Including polyvastra   # - including polyvastra and solarvastra

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

The below table shows the employment details in Khadi sector under Village industries from the year 2015 – 16 to 2019 – 20 which also shows the increasing trend of employment in this sector-

Employment under Village Industries

(Artisan in lakhs)

Year	Khadi Sector’s employment
2015 – 16	126.76 #
2016 – 17	131.84
2017 – 18	135.71
2018 – 19	142.03
2019 – 20 (up to 31.12.2019)	144.60
2019 – 20 (projected up to 31.03.2020)	147.97

# including polyvastra

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

(in lakhs)

Sl. No.	Industry	Up to 2018- 19	2019 – 20 ( up to 31.12.2019)	2019 – 20 (Estimated up to 31.03.2020)
A	Khadi	4.60	4.61	4.62
B	Polyvastra	0.30	0.31	0.31
C	Solarvastra	0.06	0.06	0.06
Total (A + B +C)		4.96	4.98	4.99
D	Village industries	142.03	144.60	144.97
Total KVI Emplooyment		146.99	149.58	152.96

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

Coir Industry

The below table shows the trend of employment in Coir industry in India-

State-wise trends of employment in Coir industry

State	2014-15	2015-16	2016-17	2017-18	2018-19	2019 – 20 (up to 31.03.2020)	2019 – 20 (Estimated up to 31.03.2020)
Kerala	470788	472100	472961	474590	475077	475080	475750
Tamil Nadu	125937	127420	129803	130862	132443	132445	133375
Karnataka	30338	30440	30872	31159	31365	31365	31580
Andhra Pradesh	52946	53825	54477	54670	55455	55455	55585
Odisha	17210	17535	17760	18135	18421	18420	18490
Others	20542	20650	20876	20965	21031	21180	21200

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

The above table shows the employment opportunity is not spread all over India.  This industry witnessed much employment in Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Odisha and some other States.  Kerala ranks first in this regard following by Tamil Nadu, Andhra Pradesh and Karnataka.

Role of MSMEs

The role of MSME will be significant in generating employment opportunities in our country and to make our country a self reliance one.  This sector is the second largest employment generator next to agriculture.  The Hon’ble Minister Gadkari told that there are six crores MSMEs in the country.  Out of them, 2 crore units have not registered themselves as MSMEs of now. Till now 11.5 crore people have got employment in this sector.  The Government has set a target of 5 crore new jobs from MSME Sector.

The State Governments bear the primary responsibility of promotion and development of MSMEs.  The Central Government supports the efforts taken by State Governments through various initiatives.  The Ministry of MSME and its organizations also assist the State Governments in their efforts to encourage entrepreneurship, employment etc., and increase the effectiveness of MSMS in the current developing economic scenario.

Classification of MSMEs

An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria-

• a micro enterprise, where the investment in plant and machinery or equipment does not exceed ₹ 1 crore  and turnover does not exceed ₹ 5 crores;
• a small enterprise, where the investment in plant and machinery or equipment does not exceed ₹ 10 crores  and turnover does not exceed ₹ 50 crores; and
• a medium enterprise, where the investment in plant and machinery or equipment does not exceed ₹ 50 crores  and turnover does not exceed ₹ 250 crores.

Employment by MSMEs

The National Sample Survey conducted during the period 2015-16 shows that MSME sector has created nearly 11.10 crore jobs.  The following table shows the estimated employment in MSME sector-

Estimated Employment in MSME Sector

Broad Activity Category	Employment (in lakh)			Share (%)
	Rural	Urban	Total
(1)	(2)	(3)	(4)	(5)
Manufacturing	186.56	173.86	360.41	32
Electricity*	0.06	0.02	0.08	0
Trade	160.64	226.54	387.18	35
Other Services	150.53	211.69	362.22	33
Total	497.78	612.10	1109.89	100

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

The manufacturing sector generated 3.60 crore employment and achieved 32% of total employment generated by MSME sector.  The trade sector generated 3.87 crore employment and achieved 35% of the total employment generated by MSME sector and attains the first position.  The Other services created 3.62 crore employment and achieved 33% of total employment generated by MSME sector.

Distribution of employment

The following table shows the distribution of the above said employment in rural areas as well as urban areas in our country-

Distribution of employment

(in lakhs)

Sector	Micro	Small	Medium	Total	Share (%)
Rural	489.30	7.88	0.60	497.78	45
Urban	586.88	24.06	1.16	612.10	55
Total	1076.19	31.95	1.75	1109.89	100

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

From the above table it can be inferred the distribution of employment is more in urban areas which constitutes 55% of the distribution whereas the rural areas constitute 45% of distribution.  The employment is more to micro industries to the tune of 10.76 crores out of 11.10 crores, whereas the small sector gets the distribution of 32 lakhs, medium sector gets 1.75 lakhs.

Distribution by gender

We may see the distribution of employment by genderwise in the following table-

Distribution of workers by gender

(in lakhs)

Sector	Female	Male	Total	Share (%)
Rural	137.50	360.15	497.78	45
Urban	127.42	484.54	612.10	55
Total	264.92	844.68	1109.89	100
Share (%)	24	76	100

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

State-wise distribution

The employment generated by MSME sector is widely distributed to all States and Union territories.  The following table shows the State-wise distribution of employment-

State-wise distribution

(in lakhs)

Sl. No.	State/Union Territory	Employment (in lakhs)
		Female	Male	Total
1	Andhra Pradesh	21.01	34.98	55.99
2	Arunachal Pradesh	0.11	0.29	0.41
3	Assam	1.78	16.37	18.15.
4	Bihar	4.79	48.26	53.07
5	Chhattisgarh	4.07	12.79	16.86
6	Delhi	2.41	20.59	23.00
7	Goa	0.40	1.20	1.60
8	Gujarat	13.71	47.44	61.16
9	Haryana	2.78	16.27	19.06
10	Himachal Pradesh	1.13	5.29	6.43
11	Jammu & Kashmir	1.50	9.37	10.88
12	Jharkhand	5.57	19.34	24.91
13	Karnataka	19.73	51.11	70.84
14	Kerala	13.77	30.86	44.64
15	Madhya Pradesh	10.13	38.61	48.80
16	Maharashtra	17.97	72.77	90.77
17	Manipur	1.40	1.52	2.92
18	Meghalaya	0.72	1.19	1.91
19	Mizoram	0.28	0.34	0.62
20	Nagaland	0.59	1.18	1.77
21	Odisha	8.37	24.87	33.26
22	Punjab	4.24	20.55	24.80
23	Rajasthan	8.01	38.31	46.33
24	Sikkim	0.14	0.31	0.45
25	Tamil Nadu	32.27	64.45	96.73
26	Telangana	15.24	24.91	40.16
27	Tripura	0.44	2.51	2.95
28	Uttar Pradesh	27.27	137.92	165.26
29	Uttarakhand	0.69	5.91	6.60
30	West Bengal	43.51	91.95	135.52
31	Andaman & Nicobar Islands	0.10	0.29	0.39
32	Chandigarh	0.12	1.17	1.29
33	Dadra & Nagar Haveli	0.07	1.29	1.36
34	Daman & Diu	0.02	0.12	0.14
35	Lakshadweep	0.01	0.02	0.03
36	Puducherry	0.57	1.27	1.84
Total		264.92	844.68	1109.89

Source: Annual Report 2019 – 20, Ministry of Micro, Small and Medium Enterprises

The Uttar Pradesh ranks first in the distribution of employment which have 165.26 lakhs followed by West Bengal and Tamil Nadu.

Challenges to MSMEs

Meeting the diverse skill requirements of MSMEs spread across various sectors horizontally and vertically is a challenge.  MSME Ministry is taking many efforts to meet the requirements from Chrakha to Mechatronics, and from High School drop out to M. Tech. level courses through its training institutions spread across length and breadth of the Country.   The skill development programs are conducted through MSME technology centers.

The present COVID- 19 is another challenge to MSMEs which retards the effective growth of MSMEs despite the Government has announced various schemes for its continuous going.  On restoration from COVID – 19 it is expected that MSMEs will definitely flourish and will be helpful in generating more employment opportunities and also helpful to the economic development of our country.

Source:

1. www.msme.gov.in.
2. Annual Report – 2019 – 20 of Ministry of Micro, Small and Medium Enterprises.