Achieving a Financially Inclusive India with MSMEs

Entrepreneurship flourishes in India – from a small corner shop to small businesses, people toil day and night to turn their dreams into a reality. Many start as very small enterprises and grow bigger to become a part of the Micro, Small and Medium Enterprises (MSME) sector, which has emerged as a vibrant and dynamic sector of the Indian economy over the last five decades, contributing significantly to the economic and social development of the country.

Despite being termed as the backbone of the Indian economy, MSMEs continue to be plagued with numerous issues such as limited access to capital, lack of affordable marketing channels and heavy regulations of opening, operating and maintaining a venture. To encourage MSMEs and make operations smoother for them, the Government of India has come up with policies which can help turn this bleak scenario around and achieve the dream of a financially inclusive India.

1. Ease of Registration Process of MSMEs – The Ministry of MSME has notified a simple one-page registration form: ‘Udyog Adhaar Memorandum’ (UAM) which has helped increase in the number of UAMs filed. This has also significantly increased the information available with the Ministry of MSME regarding the trends in the sector.
2. Framework for Revival and Rehabilitation of MSMEs – The Ministry has come up with a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’. The Reserve Bank of India has also issued guidelines under which banks can create a structure for finalizing a corrective action plan for revival and rehabilitation of MSMEs.
3. MSME Data Bank – All MSMEs are to furnish information relating to their enterprises online to the Central Government in the data bank. This will enable the Ministry to streamline and monitor schemes and pass on the benefits directly to MSMEs, thereby facilitating the promotion and competitiveness of MSMEs.
4. MyMSME– To help enterprises avail of benefits of various schemes by the Office of Development Commissioner, a web-based application called MyMSME has been developed. Entrepreneurs will be able to submit and track their applications much more easily now.
5. Direct Benefit Transfer– All welfare and subsidy schemes have been brought under Direct Benefit Transfer (DBT) with the aim of reforming Government delivery systems by re-engineering the existing process in welfare and subsidy schemes, for simpler and faster flow of funds.
6. Digital Payments – The Government is promoting a cash-less economy and the provision of a seamless digital payment system to all citizens of India in a convenient, easy, affordable, quick and secure manner.
7. Grievance Monitoring– The Ministry has started an MSME internet grievance monitoring system (e-SAMADHAN) to track and monitor grievances and suggestions received in the Ministry.
8. MSME SAMADHAAN –  This portal helps in getting delayed payments settled mutually between seller and buyer.
9. GST Rollout and Ministry of MSME – The Ministry has made elaborate arrangements for smooth roll out of GST and has trained over 20,000 people in the various nuances of GST through workshops conducted by the Ministry and all its field organizations.
10. Infrastructure Development Program – This program is pivotal in enhancing the productivity and competitiveness as well as capacity building of MSMEs in the country. It is responsible for supporting the sustainability and growth of this sector by addressing issues as improvement of technology, skill and quality, market access, access to capital etc.

These initiatives seem like a step in the right direction for boosting the MSME sector which in fact is the largest job creator, second only to agriculture.  The MSME sector in India is expected to go through a paradigm shift, helping the country make substantial progress in its journey towards a financially inclusive economy.