The Job Boom On Paper

The MSME sector has just about started to recover, but a new report claims that things have been well.

- Lola Nayar

A leading industry lobby recently came out with a feel­good report claiming that the micro, small and medium enterprises (MSME) sector has added up to 14.9 million jobs annually in the past four years. This suggests a 13.9 per cent increase in net jobs created, or a 3.3 per cent yearly growth over the study period. But the optimistic figures have those from within the MSME sector a trifle puzzled. The scenario painted by the industry lobby is contrary to the ground reality. Even the government had to acknowledge that MSMEs were badly hit: In November last year, the Centre had taken steps to provide easier credit to bail out many micro and small units that have been languishing or are gasping to survive for want of fresh capital.

“The CII data may well have captured the shift of MSMEs from informal to formal sector as there is no national register that shows how many people were working and what has been the growth in employment. It may well be a perception report based on the number of units now getting registered and moving from informal to formal sector and taking this to project employment growth,” says Animesh Saxena, president of the Federation of Indian Micro and Small and Medium Enterprises (FISME).

In other words, there is no data on new jobs, but more workers are now formally registered which shows a spurt in the number of employed people. The shift from informal to formal sector is borne out by the 10-12 per cent rise in the number of MSMEs registered with the FISME after the introduction of GST. The lure of getting registered under GST is the input credit such companies can obtain. Another attraction is that registered companies are able to avail themselves of easy government loans and interest subvention being provided to the MSME sector.