[Model Answer QP2023 GS3]Faster economic growth requires increase share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the government in this regard.
MSMEs contribute approximately 30% to the GDP of India. Their role becomes even more pronounced when we consider their contribution to the manufacturing GDP, which is around 33%. In addition, nearly half of India’s exports are attributed to MSMEs.
They contribute to about 48% of India’s total exports, showcasing their capability in producing globally competitive products.
Policies and initiatives that have been put in place to support and promote them:
1. Make in India: Launched in 2014, this initiative aims to make India a global manufacturing hub. It emphasizes 25 sectors of the economy, simplifies processes to facilitate investments, and fosters innovation.
2. MSME Samadhaan: A delayed payment monitoring system where MSMEs can register cases if payments are delayed beyond 45 days after the goods and services have been delivered.
3. MSME Sambandh: This portal helps in monitoring the implementation of the Public Procurement from MSEs by Central Public Sector Enterprises. Pradhan Mantri Mudra Yojana (PMMY): This scheme has been designed to provide financial assistance to MSMEs for their growth and development. Under PMMY, loans up to 10 lakhs are provided to MSMEs without any collateral.
4. Credit Guarantee Scheme for MSMEs: This scheme provides collateral-free loans to MSMEs.
5. Revised Definition of MSMEs: The government revised the definition of MSMEs based on both investment and annual turnover, making it more inclusive and expansive.
6. Atmanirbhar Bharat Abhiyan: This is a larger framework to make India self-reliant, with a significant focus on the MSME sector. As part of the initiative, collateral-free loans, equity infusion through MSME Fund of Funds, and revision in the definition of MSMEs have been introduced.
Conclusion:
MSMEs are the second-largest employment-providing sector after agriculture in India. They provide employment to over 110 million people in the country. This is a testament to their ability to act as a seedbed for entrepreneurship and innovation at the grassroots level.
