The SME(Small & Medium Enterprises) sector, according to the FICCI report has been creating roughly 11.10 crore jobs employment across the nation as per National Sample Survey Organisation(NSSO) 2015-16.
The SME sector is rightly known as India’s “engine of growth” and consequently, taking SME credit loans or availing the SME funding has become easier over the years. Despite a glaring lack of infrastructure and various government rigid policies of the past that discouraged the people from starting their businesses/ startups, the country has noticed a remarkable growth in this sector over the years.
SME nearly contributes 8% of GDP. By 2020, the figure was expected to reach 22%. However, the unexpected impact of Covid-19 on small businesses of India and the way ahead – states that around 60% of SME has been hit hard, and further every SME faces 3 topmost challenges that might hinder small businesses to scale up their business are market access (42%), improving the overall productivity (37%) and having access to more finance (34%). SME’s originates 40% of the total exports of India and 45% of total manufacturing output comes from this sector.
There was a time when a big part of India’s GDP growth came from these SME’s only. Even these days also SME’s are focusing on India’s economic revival but facing a sharp decline in government policies & initiatives measures, leading to unemployment, increasing poverty, and income inequalities gap as due to the unprecedented Covid-19 crisis has let various SME’s shut down their business due to the lack of market access, funds, growth opportunities.
The greatest advantage of promoting small-scale industries and small-scale businesses is that they provide and generate employment opportunities, reduce poverty rate, curtail migration, encourage regional development, boost exports, increase production, increase people’s purchasing power, improve the quality of life in general for everyone. Majorly, SME’s encourage both urban and rural growth and help the Indian economy to grow at a faster pace.
SME’s, are not constrained by the limitations due to low investment requirements, short gestation period, easier availability of small business loans, and sometimes even lower expertise, Small scale business can be operated even in villages and small towns, improving the people’s standard of living in the process.
Wholesome, running the SME’s by the government is a Win-Win situation for all.