UPSC Express

Headline : MSMEs Traders Witness Loss of 35 Lakh Jobs: Survey

Details :

MSMEs Traders Witness Loss of 35 Lakh Jobs: Survey

The News

• According to a survey conducted by All India Manufacturers’ Organisation, the TMSME segment (Traders, Micro, Small and Medium Enterprises) is in a critical condition with high level of job loss and decreasing profits.
• The survey comprised of 34,000 representatives from traders, manufacturing, service and export sectors.
• The survey was conducted mainly in major MSME clusters in Punjab, Haryana, Tamil Nadu, Karnataka, Maharashtra, Hyderabad, Assam, West Bengal and Kerala.”

Job Loss

• According to the survey, the TMSME sector has witnessed job losses of around 35 lakh in 4.5 years.
• While the trader segment witnessed job loss of 43%, it was 32% in the micro segment, 35% in small segment, and 24% in medium segment.
• The worst-hit were sectors dominated by unorganised labour such as plastic, matches, crackers, dyeing units, stitching units, stone units, tanneries, job work units and printing companies.
• Further self-employed categories such as tailors, cobblers, barbers, plumbers, and electricians are also severely hit.

Decrease in Profits

• According to the survey, the operational profits of the TMSME sector have declined substantially in the last 4 and ½ years.
• While operational profits of traders dropped by about 70%, that of micro industries dropped by 43%, small-scale industries saw a dip of 35%, and medium scale industries by 24%.
• Further the sector also saw a dip in the number of companies making profits since 2014-15.

Challenges Faced by MSMEs

• Government documentation, profitability, sourcing funds, availing incentives such as subsidies were among the major challenges faced by small and medium scale industries.
• The main reasons for lower profits and job loss according to the survey are demonetization, GST roll-out and expanding e-commerce space.
• The number of traders has come down due to stiff competition from e-commerce sales.
• Availability of funds is severely hit as a result of demonetisation and GST roll-out.
• Further the rollout of GST severely hit these sectors as a result higher outstanding with government payments and compliance requirements

Way Forward

• Supply of raw materials such as steel, aluminium at lower subsidised cost to MSMEs.
• Reduced interest rate for short term and long term finance.
• Higher reservation of procurement in government purchases from MSME
• While traders reported that profitability, sales and sourcing funds are the major challenges, micro industries said that profitability, sourcing funds and raw material costs were theirs.
• The sectors that need immediate revival and assistance are housing, textiles, automobiles, power, match industries, stone, plastic, tannery and consumer products.