T., Muralidharan and Paul, Bino and Basole, Amit
(2021)
Creating Udyog Sahayak Enterprises Network (USENET) for Employment Generation and Scale-up in the MSME Sector.
[Report]
Abstract
We cannot achieve the demographic dividend unless we create jobs for millions of youth. There are multiple forces – thirteen of them identified in this report - working against employment growth in India from both supply side and the demand side. It is proven that large enterprises create very few jobs. Even these few jobs are created for educated youth. Only Micro and Small Enterprises (MSEs) can create large number of jobs across India for workers with wide range of skills and education. Out of a total of just over 63 million enterprises in the MSME sector, 62 million are informal micro and very small enterprises (MSEs). Of these, single worker firms (own-account) are 40 million, firms with 2 to 5 workers are 22 million and firms with more than 5 but less than 10 are estimated at 1 million. 107.6 million workers (97% of all employment in the MSME sector) are in this MSE segment. These MSEs, surprisingly, are more rural than urban - 51% are in rural India. Women-owned firms accounted for 20 % of all enterprises, 16 % of all workers and 9 % of aggregate value-added. There is a huge potential to grow these women owned enterprises. MSEs are the most important segment of the Indian Economy if we want to achieve GDP and Employment growth. Moreover, many of these enterprises are closely aligned with households, particularly in location and ownership. These enterprises play a pivotal role in linking the formal and the informal sector through value chains. We don’t need more micro-enterprises or more single-person firms. Instead, we need to scale-up these existing MSEs. How can we do this? By creating a support system which will make these MSEs go digital, grow in scale and increase their productivity. This will automatically create jobs The Udyog Sahayak Enterprise Network (USENET) proposed in this report is that support system. Why a support system? Because it is not possible to educate millions of the MSE entrepreneurs to become digital experts. Why now? Because India and the world are going digital. In the digital marketplace small can compete better and grow.
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