By  K R Sudhamaan

Inflation and frequent spurt in prices have created problems in defining what constituted micro, small and medium enterprises in the country.

This is an issues that comes to the fore periodically, particularly government goes for new census on MSME in the country. Several economic pundits have called for inflation indexed linked investment caps for micro, small and medium enterprises so that revision of the ceiling time and gain can be done away with.

Lately there is a proposal to at least double the investment caps for micro industries from Rs 25 lakh to Rs 50 lakh, small from Rs 2 to Rs 5 crore and medium enterprises from Rs 5 to Rs 10 crore. The MSME Minister Kalraj Mishra has already promised to get this investment caps increased shortly. The caps will go up not only for MSMEs in manufacturing but as well as services sector.

There is also controversy over whether the caps should be on the basis of investment, turnover or employment.

India’s Chief Statistician TCA Anant agrees caps based on investment as well as turnover had their own merits. Turnover indicated how much the unit produced where as investment reflected only how much investment has come into the unit.

“These are two different yardsticks. But both capture growth in the sector.” He told SMEpost.com. “But if you ask me which is better, it is difficult to say as it required an in depth analysis.”

Anant also subscribed to the view of index linked caps for MSMEs as Rs 10 lakhs ten years ago was valued much more than what it is today because of inflation. So, if index linked, correction in investment caps became automatic.

There is also a third method of capturing MSME data. The annual survey of industries what is popularly known as ASI captures employment in MSME sector.

Calculation of MSME statistics through the number of people employed could be another way of capturing MSME data. But this certainly is less desirable as it does not reflect entire picture of the sector.

Also, there is a big time lag in getting MSME data. The last MSME census was done in 2010-11. There is a proposal to carry out the next census. Once decided it would take a few years to complete. The previous one, fourth census of MSME was started in 2007-08 and completed in 2010-11.

Image Courtesy : Economic Times