SOIL Report 2008 - ACCESS Development Services

Policy: Pathways to Sustainable LivelihoodsThe MSME sector in India has grown significantly since 1960, when there were only 12,376 MSMEsproviding employment to 10 lakh people, of which direct employment was 1.85 lakh; annual productionlevel was Rs 875 crore. At the beginning of the 10th Plan, 249 lakh people in the rural and urban areaswere employed in 105.21 lakh MSMEs. This has increased to 295 lakh people in 128 lakh units now; anaverage annual growth rate of 4.4 per cent in the number of these units and 4.62 per cent in employment.If the units in the khadi industries, village industries, and coir industries are taken into account, theemployment is estimated to be over 332 lakh persons in 2007-’08 (shown in Table 3.2).Table 3.2: Year-Wise Employment Potential in SMEs during 11th Plan2007-’08 2008-’09 2009-’10 2010-’11 2011-’12 CAGREmployment target(lakh persons) 322.28 338.39 355.31 373.08 391.73 4%The MSME sector is viewed by the Plan as primarily comprising weavers, artisans, and people engagedin food processing, hawkers, vendors, and carpenters. Inadequate working capital, lack of informationto access markets and foreign business opportunities, lack of trained personnel, and obsolete technologyare the major barriers to its growth. The 11th Plan prioritises the sector on the basis of its capacity toprovide livelihoods, check rural-urban migration, generate export earnings, and improve the lives of theremotest and most marginalised people. The needs, problems, and potential of this sector differ notjust with the nature of activity (weaving, building components for big industries, etc.), but also with size,geographical location, and structure (organised/unorganised). There is provision to provide social securitycover that is sensitive to women’s special needs along with easy access to credit to women entrepreneursand appropriate advisory and mentoring services.A cluster-based approach (discussed in Chapter IV) would be a major thrust of the 11th Plan in thecase of all the areas of MSMEs. This approach includes a number of enterprise-specific programmessuch as credit for modernisation, credit guarantee for tiny units without collateral, market developmentassistance and local infrastructure development through industry associations, and testing laboratoriesfor product quality. (Also see Box 3.2).The 11thPlanprioritisesthe sector onthe basis ofits capacityto providelivelihoods,checkrural-urbanmigration,generateexportearnings,and improvethe lives ofthe remotestand mostmarginalisedpeople.Box 3.2: Cluster Development ApproachClusters are defined as a sectoral and geographical concentration of enterprise, institutions, serviceproviders and related regulatory bodies, engaged in the production of homogeneous or inter-relatedproducts and faced with common opportunities and threats. In India there are about 6,600 clusterswhich are broadly categorised as i) high-tech clusters targeting innovation for existence ii) traditionalmanufacturing clusters (around 400) targeting competitiveness and consequent employment and iii)low-tech micro enterprise ‘poverty-intensive’ clusters (around 6,000) that have employment as wellas poverty implications.With the inclusion of handlooms, handicrafts, wool, and sericulture, the total number of jobs in theMSME sector in India goes up to 650 lakh. The employment intensity of the registered units indicatesthat an investment of Rs 0.72 lakh is required for creating one employment in the MSME sector asagainst Rs 5.56 lakh in the large organised sector.4. The 11th Plan aims at accelerating growth in employment in other sectors,countering past trendsThe sectors with prospects for high growth in output, creation of new establishments and for creation63