ISED Small Enterprise Observatory at the Institute of Small Enterprises and Development (ISED) has suggested setting up of a National Commission on Employment and Enterprise Development to address the disruption in labour market on account of Covid 19 pandemic.

The Institute’s suggestion comes through the ‘India Micro, Small and Medium Enterprise Report 2021’, released here.

The report, 24th in a series, forms part of the Institute’s unique annual Development Report Series on the state of MSMEs in the country. The purpose of the report series is to capture the developments relating to MSME on a real-time basis, and to shape a futuristic view that is useful to businesses, policy makers and practitioners.

With “Disruptive New- Normal & Survival Strategies for MSMEs” as its lead title, the report examines the dynamics of the labour market in the context of Covid-19, and its implications for employment and entrepreneurship. MSMEs being the second largest provider of employment, their sensitivity of the labour market relating to economic growth in India are significantly high.

Dual crisis for MSMEs

While the perceived “new normal” remains prolonged, the labour market gets increasingly polarised, with the minority of those having secured wage employment on the one side, and all those who are forced to embrace self-employment as a career by intent or compulsion.

On the basis of the field evidences, the report brings to light the dual crisis of the MSME sector. On the one hand, despite several significant policy measures by the Government and the Reserve Bank of India, the SMEs, given their several recent constraints, are unusually slow to catch up, thereby leading to a significant ‘capacity utilisation crisis’. There is also a ‘labour utilisation crisis’, by which the firms are not able to use their labour effectively, as the rural economy also is significantly disrupted during the second wave of the pandemic.

PLI scheme

Production- linked Incentive (PLI) scheme is a major step by the government to address the problem of stagnation in industry. It provides incentives to companies for enhancing their domestic manufacturing apart from focusing on reducing import bills and improving the cost competitiveness of local goods.

The scheme needs to be broad-based, with greater involvement of the MSME-dominant sub-sectors. But, against the uncertainty around the course of the pandemic, India’s drive to catch up with the ‘Fourth Industrial Revolution’ is constrained. Meticulous and expeditious strategies for energising the entrepreneurial mind and thereby boosting the spirit of innovation will have its natural spill-over in MSME oriented decentralised manufacturing.

The ISED report is based on evidences available from all major stakeholders, macro, regional and sub-sector levels, besides the available macro data base and knowledge resources of the Observatory, said PM Mathew, the Editor of the report and ISED Chief.

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