Raj K Pathak

Connecting Entrepreneurs with Information,Knowledge & Networking

Solution to unemployment lies in promoting MSME sector

September 21st, 2014

In India one person out of three persons who is holding a graduation degree and above in the age group 15-29 years is found to be unemployed.(According to Labour Bureau’s Third Annual Employment & Unemployment Survey 2012-13).

Unemployment rate amongst illiterate youth is lower than educated youth. A comparison with the earlier report by labour bureau shows that the unemployment level has increased during 2012-2013 over 2011-2012.

While unemployment rate among illiterate youth is lowest with 3.7 per cent for the age group 15-29 years at all India level in 2012-2013, the unemployment rate in the same category was reported at 1.2 per cent in 2011-2012 report.

As stated in the report, the unemployment amongst the graduate youth that happened to be at 19.4 per cent in 2011-2012 increased to 32 per cent during 2012-2013.

Similarly, the unemployment rate amongst the educated youths reportedly increased with increase in their education level. (Amongst all age groups viz. 15-24 years, 18-29 years and 15-29 years).

As per Planning Commission of India about 10 million new youth are added every year to India’s unemployment population seeking employment.

There are hardly any jobs in Central/State governments.The large corporate has been having employment less growth over last since more than a decade.

So, only hope to absorb 10 million people that enter work force per annum lies with Micro,Small and Medium Enterprisies(MSME).

It  is therefore,imperative that MSME sector is promoted and supported to be able to be job creator for the country.Apart from being job creators for the country,MSME sector also ensures equitable and inclusive growth in the country.

As per MSME Minstry organised All India Census of MSME,2009, there are total of 26100797 MSME units in India, out of which only 1552491 ie 5.95% are registered units and 24548306 units are un-registered ie 94.05%.

These MSME units give employment to about 60 million workforce (45% of total workforce in India)  with 9.5 million in registered and 50.3 million in unregistred units.Out of registred units 28% are in manufacturing and 72% are in service sector.

The survey also came up with the findings that the major concerns of MSME entrepreneurs remain “lack of demand ” and “lack of working capital”.

Govt of India as well as state governments need to focus on strengthening of MSME sector before it’s too late.There are many schemes for development and promotion of MSME’s but due to lack of awareness, large number of MSME untis are unable to take benefits from the Govt.

Few things government need to focus upon are as under:

1-Make it easy for a unit to register  under MSME Act.Every state should make registraion of MSME possible through online registration.This will encourage more and more unregistered units to register and thus take advantage of Govt schemes which presently is available only to registered units.

2-Irresepective of various committees having recommeded “Easy flow of credit and availablity of credit at affordable price”  to MSME sector, it still remains a distant dream for large number of them.Only about 5% of MSME units are able to get funding from financial institutions.RBI has few guidelines but Banks shy away from obeying such guidelines.RBI should make some of its guidelines for MSME sector as “Mandatory” to bring some visible change.

3-MSME BRAND DEVELOPMENT FUND should be initiated to help create demand for thier products and services.

4-Media should be involved to attract youth towards entrepreneurship and self-employment.Youth needs to be job creator instead of job seeker.

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