Yes, we are talking about the economy of our nation. The economy which once wished to hit the $5 trillion level had no idea that a vast pandemic was on its way. Plans were made for ways to achieve this high level of $5 trillion, but the pandemic came in the form and disrupted everything, including the country’s MSMEs. The virus was so fatal that it forced the government of the nation to impose a nationwide lockdown.
The economy of our nation was stuck, the shops were closed, and businesses were shut. Everyone was forced to sit in their homes and spend time with their families. There was no source of income for anyone, and therefore, all of us relied on our savings. Moreover, the micro, small and medium enterprises were the one that was hit the most by the pandemic.
There are several reasons behind this, but the main reason was that when big companies and industries were operating with computers and laptops at their homes, thereby earning money through work from home, this MSME sector failed to do so. The primary reason is that most enterprises require physical presence and cannot be done through computers.
The sector is said to contribute to economic recovery and is the major player in the economy’s race, reaching $ 5 trillion. Moreover, even when the economy slowly opened with many imposed restrictions, this sector could not function properly. However, things have changed when the economy has opened up, and the tables have been completely turned. The MSME is the major player in this, and how we will discuss everything about it in this article.
India has the second-largest base, which is after China, in the whole world. It means that this sector employs a vast industry of the nation. We all know the potential of Indian MSMEs. They can play the role of the key driver of the Indian economy and potentially spread industrialization through the whole nation.
What is its contribution?
The contribution of MSMEs to the Indian economy is enormous. It provides for nearly 40% of the total exports from the nation and 45% of the entire manufacturing. Moreover, the MSMEs are a vast employment provider for the country’s workforce as it provides work to 40% of the total working force.
Not to forget, the MSMEs have been growing at a very efficient rate, and the last two decades have been quite fruitful for the MSME sector and the Indian economy. According to the official data provided by the government, nearly 11.10 crore jobs have been said to be created by the MSME sector alone. This number is enormous and therefore is a piece of great news for the whole Indian economy.
Currently, there has been an ongoing coincidence of wants. How? The country is aiming to reach the level of $5 trillion by the end of Financial Year 2025 as well the MSME sector is on the track of high-paced development. There have been constant efforts by both the government and the MSMEs in response to this goal. Therefore, this double coincidence of wants of the MSME and the government’s $5 trillion level puts MSMEs in the driver seat on this growth track.
The previous predictions made by the government were that the MSME sector would provide nearly a quarter of the GDP by 2020. However, this prediction did not come true as the country had to fight a pandemic.
As of now, the MSME sector provides for 17% of the country’s total GDP, but it can reach a quarter of the real GDP. Moreover, the possibility of MSME can provide the necessary thrust, which is much needed by the Indian economy to achieve its current biggest goal, which is to reach a level of $5 trillion economies by the end of Financial Year 2025.
Let us now discuss why it is said that the MSMEs will be the key player in making our economy a $5 trillion economy.
Currency, 6.3 crore MSMEs are functional in our country. The first and foremost reason behind this is that this sector’s micro-level outcomes are so good and deserve appreciation. It points out the very high level of employment that it creates. Not just work, along with providing large-scale employment, this sector helps the country fight the problem of poverty. The MSMEs play a significant role in halting the growing poverty of our nation.
They also contribute to improved literacy among the poor and help them move towards a better standard of living. As said earlier, the MSMEs have been witnessing constant growth.
This growth has led to the rapid development of the regional areas by setting up new MSMEs in those areas and providing employment opportunities to the people living there. Moreover, this has also led to increased exports, which has helped the country hold exports. It has also led to improving the quality of life of the people working in this sector.
These are the micro-level outcomes of the growing MSMEs and have directly contributed to the nation’s GDP and development growth.
Another reason is the ability to be the engine of the growth of the growing Indian economy. This sector accounts for 80 percent of the total enterprises in our country and is therefore very huge. These 80 percent of enterprises produce nearly 8,000 different value-added products and are highly productive. This productivity is the sole reason that this sector attracts a lot of FDI to the country.
Ever since the MSMEs started to rise, the nation’s export sector has also begun to shine. According to many reports, it has been said that the holistic growth of this sector is a must and will play a significant role in deciding where our country stands in global manufacturing and operations. These factors also show that the development of SMEs is essential for the growth and development of the nation.
We all know how vital the support of government is, right? In the case of MSMEs, the government has been providing constant support by launching new policies benefitting these enterprises and providing necessary funds or subsidies and other financial and non-financial aid.
The sole reason behind this is the constantly changing environment. Now is the time for MSMEs, and they should appropriately utilize them. The country could reach a level of $5 trillion economies by the end of 2025 only if the MSMEs operate at the highest of their efficiencies, which requires the government’s support. Article Proof Read & Edited By Shreedatri Banerjee