Academic journal article Academy of Entrepreneurship Journal

PERFORMANCE OF THE MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs) MANUFACTURING SECTOR IN SELECT STATES IN INDIA: THE CONCEPT OF MSME MANUFACTURING BUSINESS FACILITATOR (MSME-MBF) INDEX

Academic journal article Academy of Entrepreneurship Journal

PERFORMANCE OF THE MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs) MANUFACTURING SECTOR IN SELECT STATES IN INDIA: THE CONCEPT OF MSME MANUFACTURING BUSINESS FACILITATOR (MSME-MBF) INDEX

Article excerpt

INTRODUCTION

India is a union of a number of states and union territories. Some states are industrially developed where as some others are agriculturally advanced. Different parts of the country have different advantages; while west and south India are industrial belts, east and north India have agricultural landscapes. During post reform period i.e., post 1991 employment scenario in the country has become much more complex. While the contribution of the agriculture sector to national GDP has come down, from more than fifty per cent at the time of independence to just over ten per cent now, it is still the largest employment providing sector in the country. The share of industrial sector in both output and employment has remained more or less stagnant. On the other hand while the share of the services sector in national output has increased manifold, its share in employment is low. This anomaly in share of national output without corresponding share in total employment for the agriculture sector and the services sector needs to be corrected and some strategy is needed to transfer surplus labour force in the agriculture sector to other sectors. It is a matter of fact that the services sector is a highly productive sector and it has limited ability to generate enough employment opportunities.

With regard to the industrial sector in the country, we believe that the time is now ripe for it to grow and increase its share in both output and employment. A thriving industrial sector may be an answer to the unemployment problem of the country. For instance, country specific and sector specific studies (Sahoo & Bhunia, 2014) have shown how labour intensive massmanufacturing enabled China to become a manufacturing powerhouse, providing employment opportunities to millions, helping large segment of the Chinese population to come out of poverty and what other countries including India can learn from China in this regard.

Within the manufacturing space, the MSMEs need special mention for their ability to create large employment opportunities. They are more agile in nature and can act as a catalyst for rapid socio-economic transformation and regional economic integration of different regions within the country. MSME Manufacturing units are vividly active in states and regions that are traditionally prosperous, industrially. When we talk of industrially advanced states in India we generally come across few well-known names such as Maharashtra, Gujarat in Western India, Tamil Nadu, Kerala and Andhra Pradesh in South India, West Bengal in Eastern part of India and Uttar Pradesh in northern India. Based on the available data on MSME manufacturing sector, let us examine how the performance of the MSME sector in different states vary and how performance of the MSME sector in traditionally well off industrially developed states compares among them and also vis-a-vis lesser well off states. We will be considering three related variables namely number of MSME manufacturing units, MSME manufacturing employment and market value of fixed assets of the MSME manufacturing sector for this purpose.

The flow of the paper will be as follows. Section 2 identifies the states which are doing better than other states/UTs in the MSME manufacturing space on the basis of their relative share in the three variables mentioned above i.e., number of MSME manufacturing units, MSME manufacturing employment and market value of fixed assets of the MSME manufacturing sector. Section 3 gives comparative ranks of select states and poor performing states along with a comparative picture of their performance in the MSME sector vis-a-vis the country at large.

It also gives rationale behind the selection of Select States and Poor Performing States. Section 4 discusses the available literature in the subject matter. Section 5 explains the concept of 'The MSME Manufacturing Business Facilitator Index'. It discusses the various criteria, subcriterion and the weights assigned to them. …

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