Factors affecting growth of health sector MSME firms

Abstract

In a developing country like India which struggles to provide proper healthcare to most of its population, MSMEs (Micro, Small and Medium Enterprises) in health sector can be blessing disguise. India doesn’t spend much of its GDP on health sector compared to even countries like Nepal or Bhutan in 2012 as World Bank data . India spent 1.3% of its GDP on health sector whereas Nepal spent 2.2% and Bhutan spent 3.2% of their GDP on health sector. To add to woes of Indian healthcare sector quality of treatment and facilities available to differ from urban areas to semi-urban areas and rural areas. Also as per World Bank data, Indians paid 86% out-of-pocket expenses for their health requirements . This is significant number even when considering that poverty has decreased over years in India to 21.9% in 2012 . Imagine a situation of a middle-income household in India which has to incur significant portion of its income to get health benefits, the, such a household turn into lower income household. Looking into the need of the healthcare and the impact healthcare needs have on most of the household in India, it becomes all the more important to have MSMEs fulfilling various healthcare needs. These MSMEs can play a major role in provision of healthcare needs to manufacturing of pharmaceuticals and medical equipment. Provision of finance and facilitation of infrastructure support can help MSMEs to provide quality products and services for the health sector. It will also help in lowering the cost incurred by individuals/households while seeking health related services. MSMEs can also help in providing employment to people. Therefore, role and impact of MSMEs cannot be ignored in the overall scheme of things for healthcare in India. As part of the CCS project our focus is on MSMEs in the health sector. We will do a comparison between pre and post 2006 eras for MSMEs involved in health sector. We will refer MSME census data for 2001-02 and 2006-07 to do this comparison. Now the question arises why year 2006. The year 2006 was a watershed for MSMEs when Micro, Small and Medium Enterprises Development Act (MSMED act) was passed by the Indian parliament. This act was aimed at looking after interests of MSMEs in India so that they can become more competitive