Indian economy is unique in many ways. One of its major features
is the dominant role played by the non- corporate sector, comprising of millions
of micro, small and medium enterprises. The non-corporate sector plays the most
crucial role in the economy, contributing the largest share to the GDP and more
than 90 per cent of employment.
The 67th round of National Sample Survey
carried out during July 2010- June 2011 reveal that there were 5.77 crore
unincorporated non-agricultural enterprises (excluding construction) employing
10.8 crore workers. 85% of them were Own
Account Enterprises, promoted and run by the owners themselves.
Of the total number of enterprises functioning in the
country, about 54 % are located in rural areas. 62% of the enterprises are
owned by persons belonging to the Scheduled Tribes, Scheduled Castes and the Other
Backward Castes. This proportion was more in the rural areas (69%) and in own
enterprises (65%).
The Fourth All India Census of Micro, Small and Medium
Enterprises for 2006-07 reveals that 95% of the units are micro enterprises in
the MSME sector. Micro and small enterprises provide 95% of the total employment,
with most of them having no access to external finance.
The MSME sector has
consistently registered a higher growth rate than the overall growth of the
industrial sector during the previous decade. The smaller enterprises employ lesser capital, use least
resources, but provide more benefits to the economy.
The promoters of small businesses come from less
privileged backgrounds. They struggle a lot to mobilize whatever little funds
they could through their families and personal networks. They continue in their business despite all
odds and in spite of lack of support from the authorities.
Studies show that
they do not have much educational backgrounds. In fact a significant proportion
of them are either illiterates or have studied only up to the primary levels.
Besides, they do not have access to financial assistance from the organized
system. Only four per cent of the banking finance goes to the smaller
businesses.
The academic institutions and policy making circles continue
to be obsessed with the western theories. Indian economy is being viewed only from
the approaches. There is very little understanding of the functioning of the
non-corporate sector and small businesses.
The neta-babu
raj curtailed the growth of entrepreneurship during the earlier decades
after independence. The later periods concentrated mainly on the organized and
the corporate sectors, without giving the attention that the smaller businesses
deserved.
There has not been adequate efforts to understand the
functioning of the non-corporate sector and smaller businesses. As a result there
is no proper understanding of the ground realities at the policy making levels.
Hence the growth of the non-corporate sector and small business suffer. In the
process, the entrepreneurship at the lower levels has not progressed beyond
certain levels.
In this respect, the special initiative taken by the
Gujarat Government to encourage the growth of kite industry during 2003- 04 deserves
a special mention. At that time the state Government under the leadership of
Shri.Narendra Modi was taking concerted efforts to develop the various sectors
of the economy in a systematic way.
The Gujarat Government invited a team of academicians
and professionals in Tamil Nadu who were involved in studying the much
neglected non-corporate sector, clusters and the small businesses and asked
them to study the kite industry to improve its prospects. It was the first
invitation for the team from a Government. More important was the realization
by the Chief Minister that a small business activity such as kite making has
the potential to grow further.
A report was made after studying the industry, visiting
different kite making centres and meeting with various stake holders.
Subsequently a work shop was organized in which all the stakeholders of the
kite industry, experts, senior officials of the banks and financial
institutions, officials and the Ministers of the Government took part actively.
Later a concept note on the kite industry and the International Kite Festival,
2014 was prepared and circulated to all concerned.
The team submitted the findings of the study detailing
different issues and problems, along with the suggestions for the development
of the industry. It is important to note that kite making in Gujarat is
dominated by women, with people from the Muslim community playing a major role.
The Chief Minister acted fast on the findings of the study and took immediate
steps to help the entrepreneurs and develop the industry.
As a result, the entrepreneurs felt happy and the business
increased manifold. Hence the kite industry witnessed fast development and
reports mention that the turnover of the industry during last year was around
Rs. 700 crore. It was just Rs.35 crore during 2003. It is a great achievement for a business that was not even a
cottage industry till then. It is all because of a proactive government under
the leadership of a visionary who wanted to develop the smaller businesses.
For the size of the Indian economy, the requirements
of smaller businesses are not large. Most of them require small amounts of
funds at reasonable rates of interest without much difficulty. But they are not able to get it in the
present system. Besides, the share of credit distributed by banks to smaller
businesses has been coming down beginning from 1990. Figures show that the
share to the household sector has gone down from 58.3 per cent in 1990 to 36.2
per cent between in 2011.
In the fast changing environment, the survival and growth
of smaller businesses require assistance. The most important of them is
finance. Studies show that apart from own funds and family support, local
finance is the most important avenue for promotion and running of enterprises.
At present entrepreneurs pay a very high rates of interest to the local
financiers. With the result, most of their income go towards servicing debts.
Hence the entrepreneurs are not able to develop their businesses.
It is in this context, the launching MUDRA bank by the
central Government assumes significance. It is to fund the unfunded
entrepreneurs who remain neglected from the organized financial systems even
after sixty seven years of independence. First of all, the Government needs to
be congratulated for this timely initiative.
Field studies in different parts of the country clearly
reveal that many of the people running the smaller businesses have extra
ordinary levels of entrepreneurship. They
have very good talents, possess high technical abilities, have enormous common
sense and lots of financial wisdom. In fact most of the owners of medium
enterprises and builders of the two thousand and odd clusters in the country have
all started their lives as small businessmen a few decades ago. Many of the
corporate houses were promoted by people who began their lives as small entrepreneurs.
Encouragement of small entrepreneurs help the nation
in many ways. It contributes a lot to the overall development due to its reach
and depth. People living in rural areas, poor urban localities and far off
places get benefited when small businesses flourish. More employment
opportunities are generated at the local levels, with lesser investments. Many
social problems get solved with increasing economic opportunities.
Non-corporate sector in India is largely self-
functioning. Their dependence on the state is less. In the case of smaller
businesses it is almost nil. Small businesses are promoted and run by
entrepreneurs on their own, with the support of their families and personal
connections. The small business do not give any burden to the state.
So MUDRA initiative is an important mile stone in the
economic history of independent India. It shows the resolve of the government
to encourage entrepreneurship at the lower levels and integrate all the sections
in the development journey. It is hoped that the MUDRA initiative will
transform the lives of people involved in different entrepreneurial activities
across the country and create new employment opportunities for millions of
people.
India is basically an entrepreneurial nation. It
has remained so since the ancient
periods. India’s prosperity during the earlier periods was fuelled by the superior
entrepreneurship in manufacturing and service activities. Contemporary field
studies reveal that India has high levels of entrepreneurship even now. This is
the reason why we are one of the highest entrepreneurial nations in the world.
In spite of all the difficulties, about half of our
population still remains self-employed. Self-employment is very less in the
developed countries, where most of the population prefer to go for jobs as they
do not want to take risk. In the US for example, only about 7.5 per cent of the
population is engaged self- employment. But large sections of Indians even
today consider self-employment as the best status in life.
With all our fundamentals and a proactive leadership, India
is expected to grow fast in the coming years. What we require is an inclusive
development approach. People from different regions and the neglected segments,
especially those belonging to the Dalit and the back ward communities, should
be encouraged to become wealth creators. In this connection MUDRA is expected
to fill the huge gap that persists now and make the small entrepreneurs the
leading stakeholders in the new development process.
( Redefining Governance: Essays on One year of Narendra Modi Government, Dr.Anirban Ganguly (Ed), Prabhat Prakashan, New Delhi, 2015, pp. 217-221)
( Redefining Governance: Essays on One year of Narendra Modi Government, Dr.Anirban Ganguly (Ed), Prabhat Prakashan, New Delhi, 2015, pp. 217-221)