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WHERE ARE THE JOBS? KNOW THE ANSWER IN CII SURVEY

by - Mar 8 2019 8:26PM

Amid all gloom over not enough jobs being created in the country, the Confederation of Indian Industry survey of over one lakh small and medium enterprises have shown 13.9% increase in net jobs created in the MSME sector in last four years or 3.3% per annum. This has disproved all other statistics which had accused the Modi government of low employment generation. Although experts had time and again pointed out that the stats regarding low employment generation were flawed. The opposition had been spreading widespread lies on the matter. We in our earlier articles have put forth how these stats are flawed and how the employment in the country has actually been increasing. Through this article, IRC would like to look into the employment generation in the MSME sector and how it was brought about.

SUMMARY: “Given that the total workforce size according to the, labor bureau is estimated at 450 million (projected for 2017-18), the overall job additions work out to 13.5 – 14.9 million per annum,” said in the survey which it claims to be the largest ever in recent times covering 105,347 MSME firms.

According to the survey, Maharashtra, Gujarat, and Telangana have been the largest job generators over the past four years while in the case of case of exporters, Maharashtra, Tamil Nadu and Telangana have emerged as the top three states. As per the survey, last four years have seen sectors like hospitality and tourism, textiles and apparel and metal products generating more jobs while machinery parts and transport & logistics were the next significant job creators.

“The survey also indicates optimism on higher growth expectations on employment for the next three years, which emanates from the fact that the government initiatives like the 2% interest rate subvention given to all MSMEs and trade receivables e-discounting system (TReDS) implemented recently would drive future growth leading to more employment,” it said.

Given that the total workforce size according to the Labour Bureau is estimated at 450 million (projected for 2017-18), the overall job additions work out to 13.5 – 14.9 million per annum. The CII survey indicates that Micro enterprises were the largest job creators in the past four years and will continue to be so in the next three years. This holds true for both exporters and non-exporters. The top job-generating sectors were Hospitality & tourism followed by Textiles & apparel and Metal products, during the past four years. Machinery parts and Transport & logistics were the next significant job creators. Maharashtra, Gujarat, and Telangana have been the largest job generators over the past four years. In the case of exporters, Maharashtra, Tamil Nadu, and Telangana emerge as the top three states. The survey indicates that a significant majority of the respondents were able to fill vacancies in under a month, underlining the availability of appropriately skilled human resources. The survey also indicates optimism on higher growth expectations on employment for the next three years, which emanates from the fact that the government initiatives like the 2 percent interest rate subvention given to all MSMEs and Trade Receivables e-Discounting System (TReDS) implemented recently would drive future growth leading to more employment. The survey also reveals that users of Government schemes expect tangible growth benefits to accrue, particularly in the medium term (3 years), that is, users expect to grow faster relative to overall growth. Amongst the government initiatives evaluated by this survey, the interest subvention facility is expected to be the biggest growth booster. The survey also points to the need for greater hand-holding of those MSMEs who are currently not using these initiatives to help them gain from these initiatives. The survey undertaken by CII is the largest ever MSME specific survey covering 105,347 MSMEs located in about 350 industrial centers spread across 28 states of India. Despite the scale, the survey was completed in around three weeks. The survey focused on two key aspects: jobs related and government initiatives for MSMEs.

JOB CREATION IN THE LAST 4 YEARS
The survey indicates that 332,394 net jobs were created over the last four years, registering an increase of 13.9 percent over the employment base four years ago. ‘Net jobs created’ is defined as recruitment less exits. Out of the survey sample, 70,941 firms were responsible for this increase. On the whole, nearly two-thirds of the respondents witnessed an increase in hiring activity over the last four years, while 17 percent witnessed no change.
Micro enterprises were the largest job generators: 240,713 jobs or 73 percent of the jobs. Small enterprises generated 23 percent of the jobs, while Medium enterprises accounted for 4 percent of the jobs. In terms of the sectoral break-up, the Hospitality & tourism sector accounted for 12 percent of the jobs.

The Textiles & apparels and Metal products sectors contributed approx. Eight percent each to the overall job generation. The other large job generators were Machinery parts (7 percent) and Transport & Logistics (7 percent). The top five sectors accounted for over 40 percent of the jobs, indicating a degree of sectoral concentration.

The survey indicates that exporters were responsible for 21 percent of the total 332,394 net jobs created over the last four years. Out of the survey sample, 11,404 exporting firms contributed to this increase. Micro enterprises were the largest job generators: 41,781 jobs or 59 percent of the jobs. Small enterprises generated a third of the jobs, while Medium enterprises accounted for 8 percent of the jobs.

GOVT INITIATIVES IN THE REGARD
The survey findings for three government initiatives targeted at MSMEs - Interest subvention for all GST registered MSMEs; Shram Suvidha; and Trade Receivables e-Discounting System (TReDS) – have been set out below.

INTEREST SUBVENTION
Around 43 percent of the respondents were aware of the Interest subvention facility for all GST registered MSMEs. Amongst those aware, over half the respondents had availed of the facility, as depicted in the graphs below.

SHRAM SUVIDHA
Around 45 percent of the respondents have been provided with a Labour Identification Number (LIN). It may be noted that this facility is currently available in limited states. Amongst those aware, over 65 percent of the respondents view single window filing as a key benefit, as depicted in the graphs below.

TRADE RECEIVABLES DISCOUNTING SYSTEM (TReDS)
The survey highlighted the low awareness of TReDS: Nearly two-third of the respondents were unaware of TReDS. However, it may be noted that TReDS is mandatory only for firms with revenue over Rs 500 crore2, that is, much above the turnover threshold for ‘Medium’ enterprises. Usage, amongst those aware, was also low. Only 30 percent of the respondents use TReDS, as depicted in the graphs below.

OTHER MAJOR INITIATIVES BY GOVERNMENT

LOAN UNDER 59 MINUTES: The portal will enable principal approval of loans up to Rs 1 crore for MSMEs from Small Industries Development Bank of India (SIDBI) and 5 Public Sector Banks (PSBs). The web portal is www.psbloansin59minutes.com. “The portal sets a new benchmark in loan processing and reduces the turnaround time from 20-25 days to 59 minutes,” the finance ministry said in a statement. Upon approval, the loan will be disbursed in 7-8 working days. On this website, in-principle approval of loans will not require any physical documents.

WOMEN ENTREPRENEURS: Out of the 25% procurement mandated from MSMEs, 3% must now be reserved for women entrepreneurs.

Government e-Marketplace (GeM): All central public sector enterprises will have to take membership of the Government e-Marketplace (GeM) to facilitate online procurement of common use goods and services by various government departments and organizations.

TECHNOLOGICAL UPGRADATION: The government announced a Rs 6,000 crore package to facilitate better technological support and tools to small industries. The money will be used for 20 hubs and 100 tool rooms for technology upgradation.

ONE ANNUAL RETURN: 
MSMEs will have to file just one annual return on eight labor laws and 10 central rules.

NO MORE INSPECTOR RAJ: Inspections of factories in the MSME sector will be sanctioned only through a computerized random allotment and inspectors will have to upload reports on the portal within 48 hours.

RELAXATION IN ENVIRONMENTAL CLEARANCES: MSMEs will now need single air and water clearance and just one consent to establish a factory.

ORDINANCE IN COMPANIES ACT: An ordinance has been promulgated to simplify the levy of penalties for minor offenses under the Companies Act.

It is clear from the above findings of the CII survey that the Modi government has been doing fantastic initiatives to boost the MSME sector especially the number of people involved in the sector. The employment in the sector has increased just because of the initiatives and the constant effort put by the government. MSME sector has been a target area of this government especially under its Make in India. It is sure now that Modi has delivered what he said. Sahi Vikaas!

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