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Three Major Aspects of MSME in driving the engine of growth in India

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Medium to Small Enterprises, MSME India

India is a developing economy which can be characterized by the following salient features:

  • Low per Capita Income
  • Rapid population growth
  • Predominance of Agriculture
  • Unemployment
  • Capital-scarce economy.

Owing to the slow Hindu rate of growth post Independence, until its fate become worse by the Balance of Payment (BOP) crisis in 1991 the country was known to be a closed economy with less competition, public sector dominance. In the year 1991, the nation under the leadership of P.V.Narsimha Rao and Dr. Manmohan Singh as the finance minister pledged 69 tons of gold to international organization IMF which in turn demanded Indian economy to be made open. And it marked the beginning of growth for the economy. Since 1991 the economy never had to look back and the GDP growth averaged at around 8%.

The Indian economy, on the eve of the Twelfth Plan, is characterized by strong macro fundamentals and aims at faster, more inclusive and sustainable growth for which it is vital, to strengthen the Indian innovation eco-system to benefit people across the spectrum and improve their quality of life. The focus should be on Infrastructure and MSME for driving growth in the coming years. Innovation is the key to reach the bottom of the pyramid.

Three Major Aspects of MSME

MSME is regarded as the engine of economic growth and promoting development due to the following reasons:

  • More Employment per unit of capital
  • Ensures more Equitable Distribution of Wealth
  • Regional Dispersal of Industries.

India is a land of huge population and is characterized by people with varied income level. Also a major chunk of MSMEs belong to the minimally advantaged section of the society which in turn constitutes a major base of the Indian population. Thus the inclusive growth of this sector becomes very crucial for the development of India at large.

The current decade has been declared as the “Decade of Innovations” where India needs more economical, diverse and malleable innovation which can produce more “economically costing” products and services that are affordable by people belonging to the low levels of incomes, without compromising the basic needs of safety, efficiency, and utility of the products. Also “economical” in terms of resources is needed so that it has a “frugal” impact on the earth and environment.

In order to succeed in all the spheres of development for the economy it is very important that the Indian economy helps in the development of the medium to small enterprises by supporting them in innovation.

Also Read on GWI Can the Indian Economy Grow? Growth vs. Inflation – A Paradox Revisited.

Conclusion

Until and unless the consumption of fossil fuel is curbed, it is very likely the coming future generation will suffer a setback due to the unavailability of the resources. It is very important that the sustainable development be imposed in the economy which will take care of the needs of the current generation without jeopardizing the needs of the future generation. Such kind of development is only possible with the help of the medium to small enterprise, which with continuous research and development will make the world a better place to live in. Developed nations like US, UK and super developing nations like China have adopted the path of MSME for driving the growth of the economy. Thus it won’t be wrong in saying that:

“Yes, MSME is the future of economy and driving force of economy”

PG

Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

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