MSME Associations' Unsung Efforts

THE MICRO, SMALL AND MEDIUM Enterprises (MSME) sector is critically important for the economic and social development of India, as it not only fosters entrepreneurship and nation-building, but correspondingly generates large employment opportunities at a comparatively lower capital cost.

- Srinath Sridharan

The lower end of the industry has single-person entrepreneurs like grocers and everything in between from commercial vehicle owners to village craftswomen. Thus, it is a vast spectrum of businesses and employability both.

However not much is known about how many (M)SME units were revived through credit supply. Research has indicated that the Emergency Credit Line Guarantee Scheme (ECLGS) provided the much-needed additional credit to more than 1.3 crore MSMEs and helped them mitigate the adverse impact of the pandemic. As per the MSME ministry’s Udyam registration portal, as on 19 March, 2022, the registered MSME units stood at 73,83,333. Since the total number of MSMEs is 6.34 crore (as per the ministry statistics), this means only 11 per cent MSMEs are registered and have access to formal institutional credit support.

Also, not much is known, with even reasonable accuracy, about what more needs to be done to help the sector, as most MSMEs work in the informal sector, are self-financed, and are outside the formal credit system! On 3 February 2022, the government replied to a parliamentarian’s query on how many MSMEs were closed down temporarily or permanently during the pandemic. The government’s response was, “As MSMEs function in both formal and informal sectors, data regarding temporary and permanent closure of MSMEs are not centrally maintained.”