Even if we foster just 4% of the existing population to pursue entrepreneurship, we can build a repository of around five crore start-ups each providing employment to 10-100 people in the initial years.
Earlier this week, in his address to the nation, Prime Minister Narendra Modi announced a stimulus package of INR 20-lakh-crore. The amount is equivalent to about 10% of India’s GDP and is aimed at reviving the stalled economy. The stimulus is among the most substantial in the world. The response inspires confidence in the government’s approach to the COVID-19 challenge.
However, the highlight of his speech was the directive of Atmanirbhar Bharat Abhiyaan or the drive to create self-reliant India. He emphasised the need to promote local products and brands so that the nation builds a robust supply chain. He said, “This economic package is for our cottage industry, home industry, our small-scale industry, our MSMEs, which is a source of livelihood for millions of people, which is the strong foundation of our resolve for a self-reliant India…This economic package is for Indian industries, which are determined to give a boost to the economic potential of India.”
Role of the MSME sector in India’s economy
The micro, small and medium enterprises (MSME) sector is the backbone of our economy. These organisations catalyse growth across the different socio-economic-regional strata of our communities. They account for 31% of India’s gross domestic product (GDP) and 45% of the country’s exports. The sector employs 124 million persons. ~20% of MSME organisations are led by women, while ~51% are located in rural regions.
A large number of MSME organisations are start-ups. In fact, India has the world’s second-largest start-up ecosystem. The community has demonstrated exemplary ingenuity in the country’s efforts to overcome the pandemic. While the MSME sector is the strength of our economy, it was also the most vulnerable due to the COVID-19 induced lockdowns.
The resurgence of India’s MSME sector
The government has been channelising its focus to protecting the sector at all costs. In my earlier blog, I spoke about how the Reserve Bank of India (RBI) has introduced measures to revive sentiments amid the coronavirus gloom. A sizable number of these measures were MSME-focused.
Following the launch of the Atmanirbhar Bharat Abhiyaan, Finance Minister Nirmala Sitharaman announced a slew of reforms to support the recovery of the MSME sector amid the pandemic. These include:
- Measures focused on MSMEs to get back to production and workers back to gainful employment.
- INR 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs
- INR 20,000 crore Subordinate Debt for Stressed MSMEs
- INR 50,000 crore equity infusion through MSME Fund of Funds
- e-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions. MSME receivables from Government and CPSEs will be released in 45 days.
In addition, she introduced a new definition of MSME by raising the Investment limit. A new criterion for turnover was also added. Further, the distinction between manufacturing and service sector will also be eliminated.
Transforming India into a land of entrepreneurs
The steps announced by the Finance Minister will go a long way in addressing the challenges faced by the MSME sector. They will boost liquidity, restore confidence among entrepreneurs and encourage enterprising minds to start a business.
Even if we foster just 4% of the existing population to pursue entrepreneurship, we can build a repository of around five crore start-ups. It is safe to assume that each of these organisations would employ anywhere between 5-100 persons during the initial years. The multiplier effect on the economy and employment is evident.
Undoubtedly, the Atmanirbhar Bharat Abhiyaan holds the potential to transform India’s entrepreneurial trajectory. If implemented effectively, it can change our nation’s destiny and catapult India to the USD 5 trillion club.
