The Finance Ministry has sought to dismiss the “narrative” that India’s micro, small and medium enterprises (MSMEs) are stagnating, citing information that it asserts exhibits smaller companies evolving into bigger models in current years. However, trade representatives are not certain the numbers have been appropriately interpreted by the Ministry.
In its current month-to-month financial assessment for February, the ministry had stated the variety of micro models graduating to small models had elevated to 65,140 in 2022-23, from 28,881 in 2021-22, “belying the narrative that MSME units suffer from the inertia of rest and are reluctant to be upwardly mobile”.
“Among the major States, Bihar, Assam, Chhattisgarh, Uttar Pradesh, Jharkhand, Madhya Pradesh, Odisha etc., have displayed encouraging results, scoring way above the country average. The number of ‘small’ units elevating themselves to the ‘medium’ category has also increased significantly, by 75%, from 3,699 in FY22 to 6,474 in FY23. These upwardly mobile units are from Maharashtra, Gujarat, Delhi, Tamil Nadu, Uttar Pradesh and Karnataka,” the Ministry famous.
Acknowledging that the MSME sector performed a significant position in the Indian economic system, with a share of 26.8% in the general Gross-Value Added (GVA) and 38.5% of producing GVA, as of 2020-21, the Ministry stated the sector’s contribution was not simply quantitatively vital but additionally qualitatively in phrases of cultivating an entrepreneurial tradition.
“There is evidence of upward inter-category mobility among manufacturing, service and trading units. The significant chunk comes from the manufacturing sector, which is reassuring, given the higher employment-generating potential of this sector,” the Ministry stated.
It famous that 53% of the models graduating from “micro” to ‘small’ had been manufacturing models in 2021-22, earlier than dropping barely to 45% in 2022-23. “This trend has been evident in the case of ‘small’ to ‘medium’ and ‘micro’ to ‘medium’ movements as well, though to a lesser degree,” the Ministry concluded.
Okay.E. Raghunathan, nationwide chairman, Association of Indian Entrepreneurs, who was related to a current survey of MSMEs that exposed that 72% of MSMEs had stagnated during the last 5 years, was skeptical of the Ministry’s findings. Specifically, he stated the Udyam portal was not exhaustive, with solely about 20%, or 1.5 crore, of the whole MSME models in the nation, registered on it.
The Ministry of MSME had launched the Udyam Portal in July 2020, enabling MSME companies to register themselves. The Finance Ministry has stated the Udyam portal fetches information from the portals of the Income Tax Department and Goods and Services Tax Network after which classifies the registered MSMEs primarily based on information on funding and turnover.
“The Udyam data is wrongly interpreted,” Mr. Raghunathan advised The Hindu.. “The classification of an applicant into micro or small or medium is by self-declaration and is not taken from the IT and GST portals as claimed. The registration has been so poor, which is evident from the fact that the number of MSMEs was 6.15 crore, even as per the old classification,” he added.
The authorities had in 2020 tweaked the funding and turnover norms for MSME classification. A micro unit is one with an annual turnover of as much as ₹5 crore and investments in plant and equipment of as much as ₹1 crore. The turnover threshold is ₹50 crore and ₹250 crore for small and medium enterprises, respectively, whereas the funding threshold is pegged at ₹10 crore and ₹50 crore, respectively.
