Assistant Professor

Dept. of Economics

St. Colomba College, Vinoba Bhave University

Hazaribag  Jharkhand, India 

Introduction

The MSMEs are backbone of the Indian manufacturing sector and have been engines of economic growth in India. It is estimated that the MSMEs account for almost 90 per cent of the industrial units in India and 40 per cent of value addition in the manufacturing sector. It is increasingly recognised that the MSMEs play a crucial role in employment creation and income generation in the Asian Region. The MSMEs can be easily established since their requirements in terms of capital; technology, management and even utilities are not as demanding as it is in the case of large enterprises. Their development is closely associated with more equitable distribution of income and thus important as regards poverty alleviation. At the same time, the MSMEs serve as a training ground for emerging entrepreneurs in some of the Asian region. The full potential of the MSMEs has yet to be tapped as there are a number of constraints hampering its development.

The Micro, Small and Medium Entrepreneurs, by and large, represent a stage in economic transition from traditional to modern technology. The variation in the transitional nature of this process is reflected in the diversity of Small-Scale Industries. Most Small- Scale Industries use simple skills and machinery. Besides playing an important role in the country's economic development, small enterprises because of their unique economic and organizational characteristics play a social and political role in local employment creation, balanced resource utilization, income generation and in helping to promote change in a gradual and peaceful manner. Socio-economic factors affecting Small-Scale Industrial entrepreneurs came to the forefront during the industrial revolution, with nations of entrepreneurial importance gaining favour by the mid-twentieth century. During the 1960's, the behaviour of the individual came to be highlighted as a major factor contributing to Small-Scale Industrial entrepreneurship. Thus, the supply of Small-Scale Entrepreneurs came to be recognized as critical to development of Small-Scale Industries.

In India, state and private enterprises co-exist. The Small and Medium Enterprises sector and business are left completely to private enterprises. Of late, developmet of the MSMEs has  become extremely important to achieve all round development in the country. Consequently, many MSMEs opportunities are emerging out in fields like electric goods and applications, medicine, engineering, agriculture, communication, atomic-energy, telecommunications, food technology, packing and the like. These opportunities have been increasing rapidly. A robust and vibrant MSMEs can derive benefits from the new opportunities in both public and private modes. In recent years both government and private agencies have initiated strategies and programmes for developing the MSMEs skills among people. The MSMEs produced a wide range of industrial products such as food products, beverage, tobacco and tobacco products, cotton textiles, wool, silk, synthetic products, jute, hemp & jute products, wood and wood products, furniture and fixtures, paper and paper products, printing publishing and allied industries, machinery, machines, apparatus, appliances and electrical machinery. MSMEs also have a large number of service industries.

Significance of MSMEs in Indian Economy

Micro, Small and Mediam Enterprises sector (MSMEs) have emerged as very lively and progressive field in Indian economy since last five decades. MSMEs as compared with big enterprises provide employment opportunities in minimum capital cost. They help in industrialization of rural and backward areas of the country to reduce regional insbalance. MSMEs are substitute of large scale industries and its contribution is very remarkable in socio- economic development of the country. At present the relevance of MSMEs is not less at any ievel. Ignorance of MSMEs is very harmful to national economy. MSMEs sector have important contribution in industrial production, employment and export. According to Annual report 2013-14 MSMEs ministry government of India this sector contributed 37.52% in manufacturing sector. This sector provide employment to 10.61 crore people by 46.75 million small and medium units. MSMEs requires a very few means as compared to large-scale industries and generate a lot of employment by its operation. These industries are means of daily bread and butter to many people of our country.

The concern with the role of MSMEs in India has significant political and social overtones. It began with the 'freedom struggle' in the country, where in, the role of self reliant political unit of administration and a decentralization economy that is based on local resources, business opportunities, and market was articulated. In the model developed by the economists Mahalanobis, the small enterprise sector in India was visualized as an engine of growth, but playing a subsidiary role to the core sector of the economy. Though the perception on 'inclusive growth' was there, from the days of the second five year plan, the word was coined much later.

While the popular perception on 'inclusive growth' continues, there are several challenges on the sustainability side. In addressing these challenges, one's socio-political perception matters a lot. An important and generally acceptable factor is sustainability. The sustainability debate has come as part of the debate on India's growth paradigm and experience. Irrespective of the rates, growth and diversification have significantly taken place in the Indian economy over the past several decades. While growth is hard core economist's concern, it is the challenge of policy to ensure that the fruit of growth are made felt to the majority of the people. it is in this context that social cushions are needed traditionally, this essentially social role has been visualized in the context of the MSMEs.

While traditionally, this social role was perceived to be performed through an automatic route situation has changed drastically in the recent past. While the economy changed structurally, there are likely to be leaders and laggards in such a change. The laggards are likely to be left out. How can they also be accommodated in to the mainstream? At the periphery of the Indian economy smes perform the crucial role.

Role of MSMEs in Indian Economic Upliftment

The role of MSMEs in the economic and social development of the country is well established. The MSMEs sector is a nursery of entrepreneurship, often driven by individual creativity and innovation. This sector contribute 8 per cent of the country's GDP, 45 per cent of the manufactured output and 40 per cent of the exports. MSMEs provide employment to about 600 lakh persons through 260 lakh enterprises. The labour-to-capital ratio in MSMEs and the overall growth in the MSMEs sector are much higher than in the large industries. The geographic distribution of the MSMEs is also more even. Thus, MSMEs are important for the national objective of growth with equity and inclusion. The MSMEs sector in India is highly heterogeneous in terms of the size of the enterprises, variety of products and services produced and the levels of technology employed. While one end of the MSMEs spectrum contains highly innovative and high growth enterprises, more than 94 per cent of the MSMEs are unregistered, with a large number established in the informal or unorganised sector. With the liberalisation and globalisation of India's economy, the MSMEs sector is facing several challenges in the areas of technology, access to credit and equity capital, and intense competition in marketing. In recognition of the potential of the MSMEs sector for employment generation and the challenges faced by it, the Government has emphasised on its growth and development.

Importance of The New Policy Thrusts

The new public policy approach in India which distinguishes between government' anci 'governance' has much significance against the debates on the policy process in the country.

Studies have shown that public policy making in India has frequently been characterized by a failure to anticipate needs, impacts, or recations which could have reasonaly been foreseen, thus impeading economic development. Policy have been reserved or changed more frequently than warranted by exogenous changes or new information. India's policy making structures have been cited to be so much inefficient or incapable with difficulty In formulating the right policy and then sticking to it. A good "good policy making process" would meet the following criteria:

1. The problems and issues confronting a sector are subjected to expert analysis

2. Information on overlaps and trade of offs with other sector is systematically gathered and made available to policy makers

3. Opposing points of view within and between sectors, are properly articulated, analysed and considered and those likely to be benefitted or harmed are identified and theirs reactions anticipated.

4. Decisions are made with due legal authority, after consultation of those likely to be affected and wth involvement of knowledgeable persons in the sectors concerned.

5. Those responsible for implementation are systematically involved in the process but are not allowed to take control of it.

6. Policy makers and/or their advisors have the honesty, independence, intellectual breadth and depth to properly consider and integrate multiple perspective had help arrive at optimal policy choices within a reasonable time.

The record of MSMEs development initiatives in the country over the last six years demonstrates the presence of varied programmes, targeting functional areas, sub sectors and social groups in the context, there are two imperatives first, there needs to be integrated view of programmes besides, there needs to be a focus on the actual delivery of these programmes without having leakage based on the indication given by the economic survey and the latest union budget, there are some important steps that need closer examination and critical review.

Shortcomings In Operation and Innovation

Lack of trained and skilled employees and workers is a very big problem for MSMEs. Many workers who have no formal training about their wok are working in such industries. This condition works as a breaker in the development of this sector. Probably it is main reason that workers of MSME sector earn low salary as compared to government sector or fix pay scale by the government. After liberalization MSMEs faced a hard competition because after liberalization there were no possibilities of the implementation of protective policies. In this condition this sector feels to make more efforts to maintain their good quality of products. Besides this, the MSMEs sector face very big problem of import of relatively cheap products by China and other countries. So it is very serious challenge for it to keep low cost of their products along with quality and how can they face this problem.

There is very big challenge before MSMEs sector about the innovation. This sector is very backward in the use of new researches and patents. Bharat Ratna award winner famous scientist professor C.N.R. Rao said that mostly foreign industrialists use the patents of his research. Even after telling about his researches the native industrialists took no advantage of his researches nor did they have any positive approach about the research. MSMEs stays deprived of advantages of the many important and helpful researches in India.

A New Concept On Skill Development & Employment Generation

Even against the major initiatives on technical an vocational education the Indian economy suffers form a serious skill-gap. However the dimensions of the problem have not been holistically understood and translated into policy interventions. Until recently, the policy approach was essentially one of strengthening vocational education infrastructure, and to provide add-ons to it. A Major departure from the above approach was introduced by the 

Union Budget 2014. The Budget Has an Integrated view of skill Development Beyond modular skills, it Unraveled an integrated approach by which modular and motivational skills are harnessed side by side. The side flagship programme, 'Skill India', if properly organized, can go a long way in triggering a vigorous start-up Movement in the country.

Integrated Approach About Manufacture And Msmes Sector

As noted already, the national Manufacturing Competitiveness Programme And the National Manufacturing Policy, have Undoubtedly Highlighted the importance of boosting manufacture in the country. However, on translating the programme into schemes the record so far has not been commendable, more recently, the identification and thrust given to three focal sectors is indicative of the more concerted effort that is likely to go into these subsectors. They are (1) defense production; (2) electronics; (3) textiles.

Harnessing the Potential of Socially Marginal Groups Managing multiculturalism is indeed a great challenge and opportunity in the MSMEs constituency. India' as a country, and more specifically in the rural setting, the configurations of cast and language get reflected in enterprise clustering and recruitment strategies. With India's diverse groups of communities form different cultural backgrounds getting empowered and achieving educational attainments, the socially marginalized groups are Likely to be increasingly absorbed by the MSMEs. But how far are MSMEs equipped to manage such diversity? It is, at the time. a question of social engineering and public policy.

The so called 'Social Marginality thesis states that, the marginal communities in a society contribute more significantly to economic development, than the mainstream communities. This globally demonstrated behavior pattern has significant implications for India's development strategy. In India the socially marginal groups, as per the constitution have been identified as eligible for some special Protection and privileges. The setting up of the Ministry of Minority Affairs has gone a long way in coordinating these activities. However, how to harness the economic potential and special capabilities of these communities in the agenda of economic development? This crucial question has remained only partially addressed so far.

On one hand the Minority groups in any society often had difficulties in getting integrated with the mainstream and therefore, they often try to identify particular economic time zones. On the other hand, in many countries, the minorities are not properly integrated into the mainstream economic activities example: Batik craft in Vietnam, crafts Indonesia, Pottery in Vietnam' crafts and cloth of yugur minority in China, ethnic food items of Chinese kazak minority, are examples. In the Indian context, brassware in Moradabad, lace-making in Narzapur, wooden toy-making in channapatnam, and Udupi hotels in Karnataka are some of the example having their ethnic stam and reputation The Union Budget 2014 came out with a programmer for the up gradation of skills and traming in ancestral arts fro development called 'Up gradation of traditional skills in arts, resources and goods' announced by Budget, would be launched to preserve the traditional arts and craft which are a rich heritage. Despite this high relevance of multi cultureless and the significant economic role of the minorities. no attempt so far has been Made to identify and integrate the role of these communities with the existing knowledge system that support policy making in the country.

UNDERSTANDING ABOUT DEVELOPMENT

The rapid change in the so called 'developed economies are Associated with a new dynamics. new rules and new drivers for success. The greatest structural change in the global economy during the past quarter century has been the growth of the knowledge economy. The prominence of knowledge as a critical input implies a division between the old economy. These countries are changing form an industrial economy based on steel, automobiles, and road to a new economy built silicon computer and networks. This implies a significant shift in economy relationships, that is as significant as the previous displacement of the agricultural age by industrial age. The new economy is all about competing for the future, the capacity to create new products or services, and the ability to transform businesses into new entity to transform businesses into new entities. While these new entities could not be imagined yesterday, the day after tomorrow, they may be obsolete as well. There are some important, but overlapping themes that differentitate the 'new' economy from the old. They are: (1) Knowledge; (2) Digitization; (3) virtualization; (4) molecularization; integration/ Internet working; (6) Dis- intermediation; (7) convergence: (8) Innovation; (9) presumption: (10)Globalization; (11) Discordance: and (12) Boom of self-employment.

In India, despite its long histroy of MSMEs development policy, our efforts towards knowledge creation and its transmission to the context of this sector is much below global standards. For example, the lifting of quantitative restrictions (qRs), that offered a protective framework to the MSMEs, was abandoned. However, being exposed to the open market, the sector did not get the benefit.

While a level playing ground was expected to be brought through the liberalization policy, the result was not sector at policy level, it was argued that innovation is the mantra of sustainability of the sector, but action in this regard was relatively constrained. In a knowledge economy, the sustainability of MSMEs cannot be expected on a stand-alone basis. It needs the benefits of intersectoral linkages. Here the old concepts of development dependent essentially on imported technology, have a lesser role. In the, new economy, space and time are crucial, need be best used through local knowledge systems. India strack record relating to knowledge India s track record relating to knowledge systems specific to the MEM sector needs much more improvements. Such a knowledge system needs to be integrated system needs to be integrated and should touch upon and nourish the whole value chain that is applicable to the MEMSs make in indai' as a strategic approach marks a departure form this beaten track of course, its implications on MSMEs is debatable.

ENTREPRENEURSHIP DEVELOPMENT

Traditionally, in India, entrepreneurship was considered as emerging form the business communities this stream of thinking underwent a radical change in the early 1970s, which gave way for proactive entrepreneurship development policies through structured entrepreneurship development programmers. Through this resulted in the mainstreaming of entrepreneurship development through institutions and programmers, the impacts are yet to be measurement. need to be properly developed. Entrepreneurship development Entrepreneurship development Initiatives involve two Crucial components 1) Program Modeling, 2) delivery of Programs

several evaluation studies have indicated constraints on both counts.

Given the huge size of the country and the large size of its young population, it is necessary to develop a proper approach to understanding measurement and planning for entrepreneursh ip development. It is in this context that a resource approach becomes relevant. Entrepreneurship is a critical resource which needs to be preserved and nourished. Against this Imperative, the track record of policies and strategies need close examination.

Integrated Approach About Capacity Enhancement

The word capacity building, in it self, is and integrated concept. In any economy, the prevailing features of labour market determines the type of capacity that need to be treated. However, Approaches to capacity creation may vary. The Country Presently faces the challenge of significant mismatch in the labour market. It leads us to the imperative for skilling India's Young population on a war footing so that their absorption into the Productive sectors of the economy can be enhanced. This solid argument was pur forward by the Prime Minister, in his independence Day Speech last Year. He announced the flagship programmer called Skill India Which provides an outline for the country's Labour market policy. However the details of such a policy need to be Worked out. The Ministry for Skill Development and Entrepreneurship has been set up in November 2014 to give fresh impetus to the Skill India agenda and impart employable skills to its growing workforce over the next few decades.

As India transforms itself into a knowledge economy, there exists the need for energizing, motivating, and skilling its population, especially the young, not only in quantitative, but qualitative terms as well. This demands much more meticulous work relating to institutions, programmes and standards. Such a strategic approach presupposes a National Policy that acts as a thumb rule for India's labour market agenda.

Skill development, however cannot be viewed in isolation Skills are fundamental to, but not sufficient for gaining defferent jobs or to become a good entrepreneur. Labour market interventions, of which skill development forms a major parts, needs to be demand - driven they need to be an integral part of the employment and economic growth strategies coordination with the other national macroeconomic policies and strategies is, therefore.

critical. Therefore, the need for initiatives in development of skills and entrepreneurship has to come form the need for enhanced income opportunities, including: 1) employment; 2) self employment; and 3) labour export wage employment ensures income for survival. Self- employment, besides contributing to subsistence, is catalytic to income and employment multiplier. Labour export adds to the foreign exchange resources of the country. An integrated lobar market policy has to take care of all the three in a scientific manner. While all these differen! aspects, though structurally interconnected, are taken care of by various Ministries and departments of the government of India there needs to be functional synergy.

It is estimated that, during the seven-year period of 2005-2012, only 2.7 Million net addition jobs were created in the country. This indicates that the supply of wage employment in the country is much Shorter, in relation to the demand. Therefore, at least a part of the jobseekers, given the right motivation and orientation, can be channelized into the entrepreneurship stream this necessitates provision of proper business development services(BDS) Which includes training in entrepreneurship and imperative for skill development the National Skill Development Policy was formulated in 2009. The national policy on Skills and Entrepreneurship development 2015 supersedes the policy of 2009. The objective of This policy is to Provide a framework for labour market interventions at scalw with speed, standard (quality) and sustainability. It aims to provide an umbrella frame work to all skilling activities veig carried out within the country, to standardize them and to ensure them that they are market- droven- In addition to laying down the objectives and expected outcomes, the policy also identifies the institutional framework which will be the vehicles to reach the expected outcomes. Skills development is the shared responsibility of multi stakeholder platform, including government, employers and individual works with NGOs, private training organizations and other stakeholders palyigh a critical role.

The Prime minister's vision of skills India needs to be take forar within the framework a meaningful labour market policy, where ecery ministry/ department at the national and state level have a specific role to play these roles need to be specified in relation to their specific expertise, so that supplication of efforts are minimized.

A Critical Approach about Social Issue

Impact investment and social enterprises are two key concepts in the semantics of responsible business today. However these concepts are yet to pick up in the Indian context. India, Given its huge size faces several social problems. These social problems need to be addressed basically in terms of the present resources and opportunities. In every social problem or social cost, there is an opportunity in waiting. It is the perception relating to tapping these opportunities, that is central to the agenda of sustainable enterprise development enterprise is basic human trait which need nourishment in particular context in the case of a social problem, the opportunity in inherent and it has to be identified and channelized for a meaningful solution. It is in this context that the relevance of social enterprises arises.

Social enterprises are defined as enterprises that operate like a business, Produce goods and services for the market, but maags there operations and redirects then surpluses in pursuit of social and environmental goals. They are revenge generating Businesses with a twist whether operated by a nonprofit organization or by a for profit company, a social enterprise has two goals (1) to achieve social, cultural, community, economic or environmental out comes: and (2)to earn revenue, on the surface, many social enterprises look, feel and even operate like traditional businesses. But Looking more deeply, one discovers the defining characteristics of the social enterprise: the mission is at the centre of business an important supporting role.

Organisation may be placed on the social enterprise compass, which measures enterprise and organization on a continuum between the private and public sectors. On the critical axis. each enterprise or organization is categorized is categorized by its primary objective form social Purpose at the top to commercial purpose at the bottom. A Social Economy develops because of a need for new solutions for issues in a socially responsible manner (social, economic or environmental) and to satisfy needs which have been Ignored (inadequately fulfilled) by the private or public sectors. By using solution to achieve not-for-profit aims, a social economy has unique role in creating strong, sustainable. prosperous and inclusive society. Difficult the limits of a social economy sector is difficult due shifting politics and economics, at any time organisation may be "partly-in, partly-out". Moving among sub-sector of the social economy.

Successful society enterprises play a role in fulfilling government policy objectives by:

1. Increasing productivity and competitiveness.
2. Contributing to socially-inclusive wealth creation;
3. Enabling individuals and communities to renew local neighourhoods;
4. Demonstrating new ways to deliver public service;
5. Developing an inclusive society and active citizenship.

Given the vastness of the country, India has produced several social enterprise models They range from purely government- designed ones to private models. Thought there are many names in this area the still lacks in a social enterprise policy at the national level. Despite India's remarkable GDP grouth over the last two decade, one-third of the country 's 1.2 billion population still lives below the poverty line. Besides, more than 40 per cent of children under five are malnourished, while the World Health Organisation says some 620 million people are forced to defecate in the open. Therefore, responding to these issues though socially targeted investment, or impact investment, is a major challenge. Social enterprise can play a key role in India's agenda of inclusive development. However, just like in many other countries, they are not officially or legally recognised as a sector in India. even while they play an important part in the fight against poverty.

While the cinallenge lie in defining what a social entreprise is, once defined, it could pave the way for strong policies to help such businesses go from idea to innovation. This could to include investment, loan and grant for start-ups, incentives such as tax-breaks, subsides on land, power and water. Currently, most start-up social enterprise get their funding from foreign investor. However, there is enough capital in India, particularly with the government and big corporations, tact as important investors.

Findings

The MSMEs sector is an imperative comprise of India's industrial sector. It contributes significantly India's gross domestic products and export earnings besides meeting the social objectives including that of providing employment opportunities 2 millions of people across the country. If the accumulated losses of an industry reach equal to or exceed its entire het worth i.e.. capital and reserve, it is called a sick industry. A small scale unit is considered sick when it's accumulated losses equal to or exceeds 50% of its peak net worth in the immediately preceding five accounting years. There is very big challenge before MSMES sector about the innovation. This sector is very backward in the use of new researches and 10

patents sickness in industry does not occur overnight rather it takes 5 to 7 years to erode the health of an industrial unit. A small scale it is considered sick when it's accumulation Translating the concept of inclusion from a political slogan into a no-nonsens, action oriented concept, is the challenge before policy makes today. Small and Medium enterprise. as a constituency can play a significant role in this regard.

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