Father of the nation Mahatma Gandhi showed us the way that India can grow only through development of cottage industries. India with its vast 1.25 billion population lived in six lakh villages. So without agriculture and rural development, India cannot develop to its potential. If farm sector grows at over 4 per cent annually on a sustained basis, India’s GDP will grow automatically by 10 per cent as it creates the necessary consumption demand particularly in rural areas pushing industrial demand.
There is one major reason for BJP to have lost Bihar assembly elections and that has gone unnoticed. It is the rural factor that is the neglect of rural India. Rural India feels that the government has not done enough for them by way of development. This is true. If growth has to be inclusive, aspirations of the rural India has to be met. Sixty per cent of India’s population is dependent on the farm sector, which did not have adequate employment generation capacity. In fact sizeable percentage of people is under-employed. It is only SME sector that could create much needed jobs and prevent migration. It will also absorb the underemployed in the farm sector.
Statistics point out that every Rs 1.5 lakh spent in SME creates one job. Capital intensive large scale industries needed four times more investment to create one job besides much higher qualification. If India were to shine for majority of its people then MSME growth through cluster development can alone do the trick. Khadi, micro, small and medium enterprises has come a long way. Today there are 490 lakh MSME units in the country with investment of over Rs 13 lakh crore employing over 11.2 crore people. But the country needed many more to ensure growth became inclusive bringing prosperity all around.
Aware of the need to speed up this process, Prime Minister Narendra Modi has brought in new initiatives. The launch of Mudra bank is one example, which will provide the much needed funds to small and poor artisans and entrepreneurs to realize their dreams. Though MSME accounted for 40 per cent of India’s GDP, 40 per cent of manufacturing and 45 per cent of exports, it does not get adequate and timely finances from banks. SME funding is considered as priority lending, yet in reality, the sector does not get the resources and invariably depend upon non-formal channels like moneylenders and chit funds to meet the financial requirements particularly working capital.
Despite this handicap, SME has done well in India and it is this sector which salvaged India’s growth in the last 2-3 years when corporate performance was none too encouraging. Another significant aspect is that absorption of technology in the SME is much better and quicker. With foreign direct investment allowed in the sector, the technology absorption would become faster.
The launch of website SMEpost.com is an honest attempt to provide voice to the unsung SME heroes through objective reporting and in-depth analysis of the issues confronting the sector. It would also highlight success stories in the sector besides providing policy announcement and issues in real time basis. The website will keep a tab on the happenings in the BSE SME stock exchange and do number crunching of data on the sector.
