New Delhi: As part of the National Democratic Alliance government’s focus on bringing micro, small and medium enterprises (MSMEs) under the formal economy’s fold, a payment platform for the MSMEs will be set up, finance minister Nirmala Sitharaman announced in her maiden budget speech on Friday.
This comes in the backdrop of the government’s plan to start an e-commerce platform on the lines of “Amazon and Alibaba" to sell products from MSMEs and the Khadi and Village Industries Commission. MSME minister Nitin Gadkari informed the Lok Sabha on Thursday, a day before the Union budget was presented, that his ministry is in the process of launching the online platform to popularize and give market access to such products.
The MSME sector is a big driver of India’s manufacturing sector and plays a key role in generating jobs. Growth in the MSME sector has the potential to bump up the country’s economy and create more formal jobs. This comes at the time of a clutch of central ministries working on how to create jobs or an environment that will spur employment generation. In its second term, the Narendra Modi administration has set up two cabinet committees to prioritize and seek solutions to two critical issues: creating new jobs and boosting investments.
There are 63.38 million unincorporated non-farm MSMEs in the country engaged in different economic activities, including 19.66 million in manufacturing and 23 million in trade activities, according to data from the MSME ministry. The sector employs more than 49.77 million people.
The Economic Survey 2018-19 presented on Thursday recommended incentivizing and handholding micro, small and medium enterprises (MSMEs) that are less than ten years of age, rather than providing benefits across the board. The rationale for the change in strategy stems from the “perverse incentives for firms to remain significantly smaller in the Indian economic landscape," that has resulted in Indian firms not growing enough to create jobs and desired productivity in the economy.
Given its focus on MSMEs, the government has also announced a pension scheme for 30 million small traders, recognising the plight of shopkeepers, small traders and the self-employed hurt by the November 2016 decision to demonetize high-value currency notes, and the much-debated roll-out of the goods and services tax (GST) in July 2017. All small shopkeepers and self-employed persons as well as the retail traders with GST turnover below Rs1.5 crore and age between 18-40 years, can enrol for this scheme. The scheme would benefit more than 3 crore small shopkeepers and traders.
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