Evaluation Study MSE Cluster Development - Ministry of Micro ...

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Chapter No: 7 – Conclusions nd Recommendationsdesire to join as members of SPV even at a later stage are allowed to do so bypurchasing controlling share at a higher price.A Clear Statement of its Strategic Intentions: It is observed that few SPVs thathave been formed from among the sampled clusters do not have a clear mission orstrategy document which will avoid its deviation from the strategic goals of the cluster.It is essential to require the SPVs to formulate this mission and strategic statement andcommit itself to following the stipulated strategy prior to the release of centralassistance.Clear Definition of its Objectives and Scope: It is equally important for the SPV toclearly articulate its objectives and scope in order to avoid attempting more than what isviable and feasible or subsequently diluting its objectives and scope.Democratic and Representative Choice of Common Facilities: The commonfacilities are the basis of the creation of the SPVs and the large expenses incurred tocreate these facilities can only be justified if allowances are made to arrive at a properconsensus on the type of common facilities that are needed by the cluster at large. Thefuture viability and proper capacity utilization of these facilities will only be sustained ifsuch facilities are selected and created with the active participation of all the potentialusers. Arrangements therefore should be made to consider the opinions of cluster actorsunder the close supervision of the CDE/CDA. It is noticed that at present, commonfacilities are being selected by a set of influential office bearers and dominantpersonalities in the SPV Board of Directors.The Proper and Time Bound Formulation of a DPR: The DPR is a critical document,which guides the creation of common facilities. It should therefore be very carefullyformulated as the planned project it often involves the use of fairly advanced technologyand procurement of expensive equipment. The DPR should be formulated on the basis ofdetailed consultations with technical experts and should be a time bound exercise.Adequate provisions should be made for consulting experts and expert institutions, andthe costs related to consultancy should be factored into the estimates submitted forapproval. The careful formulation of a DPR and its time bound approval is most essentialin order to avoid subsequent revisions and modifications. These are likely to be not onlytime consuming but also lead to cost escalations. Costs escalations arising fromsubsequent modifications are not likely to be sanctioned by the sponsors. In many casesit has been observed that the sponsor has insisted that the escalations or additional costsbe born by the SPV or alternatively a revised proposal resubmitted and consideredafresh.7.7 Hard Interventions,heir Contents, Scheduling, Evaluation andValidationThe entire CDP programme ultimately works towards the implementation of hardinterventions in the form of a common facility centre. It is only with the completion andcommissioning of the CFC that the real benefits of cluster development aredemonstrated. The successful implementation of these hard interventions providessubstantial gains in productivity thereby helping the cluster to sustain itself and grow.120
Chapter No: 7 – Conclusions nd RecommendationsThe SPV is enabled to generate its own resources and expands its activitiesindependently without further handholding by the state. Our study of hard interventionsreveals the following:Hard interventions have been successfully initiated in only a few sampled clusters whilein seven clusters the common facilities are being presently constructed they have yet tobe commissioned. It is only in the case of two clusters that the hard interventions byway of common facility centers have been commissioned and have started to function.The setting up of Common Facility Centers in nine other clusters is at different stages ofdevelopment. Therefore the impact of hard interventions is limited.Though SPVs have been formed in a fairly large number of clusters, long delays in theformulation of the DPR has brought the entire programme to a grinding halt with hardlyany forward movement. The SPVs in many cases require immediate assistance in theformulation of DPRs. Therefore efforts are immediately required to provide additionalassistance for these SPVs in the formulation of DPRs. The MSME and the concernedstate government should identify competent professional agencies to assist the SPV inthis critical task.The flow of funds and its utilization for implementing hard interventions involves manycumbersome procedures. These procedures need to be carefully studied andstreamlined. A special study should be commissioned in this regard to carefully look intothe various procedural delays and constraints and recommend the elimination of amultiplicity of agencies through which the flow of funds are presently being cleared andcanalized. A proper assessment of the need and justification for such agencies shouldalso be included in the terms of reference for the study.It is also noticed that the common facilities created are not being fully utilized. This lowlevel of utilization is affecting the profitability of SPVs. At present many cluster actorsare not using the facilities. This is being compensated by allowing these facilities to beused by other large private firms, which negates the objectives of cluster development.Attempts should be made to price the services of the common facilities in such a manneras to attract the individual units in the cluster who are not using this facility. This maymean that the SPV only covers the cost of operating the facility for the moment.However fuller utilization of the capacities is likely to lead to substantial profits in thelong run. The equitable use of common facilities is also an issue that needs to be lookedinto as there is a tendency for the larger units to monopolize the use of common facilityas they are located closer to the common facility as compared to the smaller units whoare inevitably located in the outlying area, or periphery of the cluster.The MSME should also seriously consider implementing a second phase of hardinterventions wherein the financial commitments of the State is substantially lowered.This will go a long way in sustaining the further strengthening and development of thecluster, till a stage is reached when the cluster is self sufficient, and does not require anyfurther state assistance.121
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EVALUATION STUDY OF MICRO & SMALLEN
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2.12 PROGRESS AND PRESENT STATUS OF
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INDEX OF TABLESTable No.- 1.1: CLUS
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COMMONLY USED ABBREVIATIONSBDSBusin
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31 million persons spread over 12.8
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Nevertheless, it is expected that t
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4. Role of the schemes in bringing
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Table No. - 1.1 (contd.)East/ North
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ANNEXURE - 1.1 Guidelines for Clust
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• Approval of budget and leveragi
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14. Contribution of the Ministry of
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Chapter No:2 - The General Profile
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Chapter No: 3 - The Cluster Develop
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