Strategies for the MSME Sector in a Turbulent Economic Scenario
Paper submitted by:
Phone: 9872862864 (Mob.), 0161-2451864 (Res.)
Strategies for the MSME Sector in a Turbulent Economic Scenario - Parvinder Singh
Economic Turbulence – a state punctuated by periodic and intermittent spurts of prosperity and downturn.
Recession – a temporary economic decline during which trade and individual activity are reduced.
MSMEs are defined under the Industries (Development and Regulation) Act, 1951.
Though, small, medium and micro industries are clubbed under one heading and a single ministry, it is submitted that the problems faced by them and their abilities to handle them and their responses vary considerably. There are also considerable differences in the experience, knowledge levels, managerial ability and self confidence of the entrepreneurs. This paper limits the scope to small and micro enterprises as it would be more challenging for them to understand economic turbulence and respond effectively thereof.
Performance of MSMEs
MSME sector accounts for 45 percent of the manufacturing output, 40 percent of the total exports, employs 42 million persons in over 13 million units which contribute 7 percent to GDP. It has registered a higher growth (13 percent) than the large sector (8 percent) with over 7000 products ranging from traditional to high tech items. It provides maximum opportunities for both self employment and jobs after agriculture.
Impact of Turbulence on MSE Sector
Though India has not experienced recession, there has definitely been a slowdown as is evident from the decline in GDP growth from 8 to 6.7 percent in 2008-2009. In a survey conducted by FICCI, the following facts emerged:
1. 94% of the SMEs entering into the exports market were severely to moderately hit, with markets in Europe and US collapsing and a struggle to find new...