Class Notes - MODULE 5

MODULE 5
MSME definition:
Investment in Plant and Machinery or Equipment -
Micro - Rs. 1 Crore of investment and Rs. 5 Crore of turnover.
Small - Rs. 10 Crore of investment and Rs 50 Crore of turnover.
Medium - Rs. 20 Crore of investment and Rs. 100 Crore of turnover.
The Government of India on 01.06.2020 decided for further upward revision of the MSME
Definition. For medium Enterprises, now it will be Rs. 50 Crore of investment and Rs. 250 Crore
of turnover.
The existing criterion of definition of MSMEs is based on the MSMED Act, 2006.
Ministry of MSME has reiterated that it has put in place a very strong handholding mechanism
for MSMEs and new entrepreneurs in the name of Champions (www.champions.gov.in) which
was recently launched by the Prime Minister. Interested Enterprises/People can take benefit of
this mechanism and can also put their queries or complaints.
Programmes: MSME Smadhan, Sambandh, Sampark, Champion Scheme, e-participation, PMEGP

e-portal, My MSME, Udhyam registration online, MSME data bank, Champions Portal.
Organisational Setup
The M/o MSME is having two Divisions called Small & Medium Enterprises (SME) Division and
Agro & Rural Industry (ARI) Division.
MOUs – UAE, Sweden, Mauritius, Vietnam, Indonesia, Mozambique, Korea, Botswana, Egypt,
Sudan, etc.
INSTITUTION OF STATE AND WOMEN ENTREPRENEURSHIP

The state has over the years been making a number of efforts in the direction of financial independence
of the people of the country.
The government on its part till recently had two categories of initiatives – self-employment programmes
(like IRDP and TRYSEM) and wage employment programmes (like JRY, MGNREGS, etc.).
Literacy is often seen as an important determinant of empowerment. It has practically been proved as
well because with increased literacy, awareness increases. Consequently, ability to improve the standard of life
gets enhanced. ‘Better literacy and educational level definitely have a positive impact on overall development
and productivity.’1 However, in a few isolated cases, it has been observed that lack of education which has often
been considered a catalyst for social upliftment, has not acted as a hurdle towards the goal of an individual to
establish themselves as entrepreneurs.
One thing that needs to be pointed out here is that the with the structural changes in Census reports, the
definitions of activities included in the household sector, non-household sector, etc. have been changing over
time. At the ground level, the larger implications of self-employment have more or less remained constant
across sectors. Similarly, the unorganised sector in India – its size, employment, etc., has been documented well
from time to time by the National Sample Survey in terms of village and urban enterprises, their features,
functioning, them being a proprietary or partnership, etc.
Observing the five year plans thus becomes important here. Several initiatives have been taken up
under the ambit of planning by the state. Empowerment is closely linked to the opportunities people have in
education, health, employment and for political participation. Assuming economic empowerment to be a direct
derivative of social empowerment, the state-oriented programmes for women focussed on these aspects rather
than specialised issues like the promotion of entrepreneurship as a means of financial self-dependence. Only
1
Women and Men in India (2018); 38.
recently, the state has shifted its focus exclusively on entrepreneurship as a means of self-dependence in the
context of economic and social empowerment.
For such situations, usage of microfinance as a tool for financial inclusion targeting women has proved
to be useful to a certain extent as women remain inadequately covered by the banking system. With an
outstanding credit share of 16.8% in 2010 of the small borrowal accounts of scheduled banks, the number was
around 26% towards the end of 2019 – just a 10% increase despite the massive measures introduced by the
government like opening of bank accounts for all citizens of India. 2 Microfinance on the other hand, has had a
deeper penetration under NABARD’s SHG-Bank linkage programme. The rider here is that microfinance is a
miniscule proportion of the total bank credit in the country. The institutional assistance required to address
structural limitations of the country’s economy like illiteracy, low credit worthiness, lack of investment, poor
mobilisation, etc. has not been able to be effective.
The five-year plans of India have seen a gradual evolution in the approach towards policies and
measures targeted. From ‘welfare’, this approach shifted to ‘development’ and further on to ‘empowerment.’
The first to fifth five-year plans had a broad perspective which utilised the concept of ‘social welfare’, wherein
the entire community was included. A chapter titled ‘Socio-Economic Programmes for women’ was a novel
addition there. The 7th five-year plan saw a material manifestation of the efforts made on the part of the state so
far in the form of Ministry for Women and Child Development in 1985. The National Commission of Women
(1992), Rashtriya Mahila Kosh (1993), Mahila Samriddhi Yojna (1993), Indira Mahila Yojana (1995) were
some such initiatives which were the beginning of the focus on economic empowerment of Indian women.
Credit for entrepreneurial/self-employment ventures, STEP (Support for Training and Employment),
TRYSEM (Training of Rural Youth for Self-Employment Programmes), etc. However, the outreach of these
programmes has not been satisfactory at the ground level, especially in the informal sector of the economy as
has also been observed in the Arjun Sengupta Committee Report. 3 The major obstacle faced by entrepreneurs in
the informal/unorganised sector of the Indian economy is lack of assets and low credit worthiness or access to
formal financing institutions leading to inability to arrange for the credit required for setting up a self-
employment establishment or an enterprise. The Arjun Sengupta Committee was a major step in this direction
wherein an attempt was made to develop an understanding of the dynamics of the informal economy. Another
step in the same direction was the Report on Financing of Enterprises in the Unorganised Sector & Creation of a
National Fund for the Unorganised Sector (2007).4
The Small Industries Development Bank of India (SIDBI) SIDBI provides training for credit utilisation
as also credit delivery skills for the executives of voluntary organisations working for women and other
marginalised sections of society. Grant for setting up a production unit is also available under Socio-Economic
Programme of Central Social Welfare Board. One very strong observation in the context of these schemes has
been the extremely limited outreach of these schemes amongst its target group. It is sheer lack of awareness
about these initiatives that has held back people from participating in these developmental programmes. The
TREAD (Trade Related Entrepreneurship Assistance and Development) scheme was one such ambitious project
as availing credit is not an easy task.
Several government schemes for MSMEs also provide certain special incentives and concessions. For
example, under Prime Minister’s Rozgar Yojana (PMRY). Likewise, under the MSE Cluster Development
Programme by Ministry of MSME, the contribution from the Ministry of MSME varies between 30-80% of the
total project in case of hard intervention, but in the case of clusters owned and managed by women
entrepreneurs, contribution of the M/o MSME could be up to 90% of the project cost. Credit Guarantee Fund
Scheme for Micro and Small Enterprises, the guarantee cover is generally available up to 75% of the loans
extended; however, the extent of guarantee cover is 80% for MSEs operated and/ or owned by women.
Though the government has adopted a multi-channel approach for creating awareness of the Central
Government Schemes amongst banks, MSE industry associations, MSE sector, etc. through print and press
media, conducting workshops / seminars, attending the programmes organized at various district / state /
national fora, etc., the results have not been satisfactory. There is just one bottom line here that can be
interpreted from the field study and be verified by the data available in public domain about these schemes –
that these schemes have not been able to perform as expected. Their target group is low in numbers and the end
results are very often not satisfactory.
2
Reserve Bank of India, Basic Statistical Returns, 2010.
3
Report on Definitional and Statistical Issues Relating to Informal Economy (Nov., 2008)
4
National Commission for Enterprises in the Unorganised Sector (November, 2007)

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MODULE 5

Investment in Plant and Machinery or Equipment -

Micro - Rs. 1 Crore of investment and Rs. 5 Crore of turnover.

Small - Rs. 10 Crore of investment and Rs 50 Crore of turnover.

Medium - Rs. 20 Crore of investment and Rs. 100 Crore of turnover.

Programmes: MSME Smadhan, Sambandh, Sampark, Champion Scheme, e-participation, PMEGP

INSTITUTION OF STATE AND WOMEN ENTREPRENEURSHIP

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