Utilising MSMEs as engines for growth

Abstract

It is worth considering whether money lenders can be brought under regulation and an interest cap be imposed for lending to MSMEs, as is the case in Japan. Recent growth data for India reveals that there has been a significant slowdown in the industrial growth rate, especially manufacturing, in the first quarter, April-June, 2015. According to the recently released Annual Report (AR) of the Reserve Bank of India (RBI), gross capital formation has been declining over the years, especially households. The performance of the agriculture sector has also been slower than the previous year because of uncertain rains in the last few months. In context of continuing uncertainty in the agriculture sector because of substantial dependence on rain-fed irrigation, an alternative power pack, unutilised, is micro, small and medium enterprises (MSMEs). The MSME sector in India employs nearly 11 crore people through the operation of 5 crore enterprises producing a heterogeneous basket of about 7,000 different products. As MSMEs are generally labour-intensive, they have the capability to create more jobs to cater to a young demographic country like India. Further, in view of the continuing implications of climate change, it is necessary that the MSME sector is prepared to absorb millions who may be rendered unemployed in the agriculture sector. Read more at: https://www.thehindu.com/opinion/columns/Economy_Watch/utilising-msmes-as-engines-for-growth/article7637948.ece