By Faiz Askari, Founder Editor of SMEStreet
The economy is undergoing a C-Change, some are also calling it economic transformation. This transformation is not just a digital transformation or it is not just a side effect of any policy drift. But this massive transformation is happening due to multiple reasons and its happening across. There are several challenges that his economic transformation is bringing along. Job creation is one such major challenge with which governments are struggling. Now, to sustain successfully this economic transformation, the policymakers are thinking towards an accelerated approach for economic growth. We can term this economic acceleration.
Our policymakers have understood the need for job creation in the economic acceleration regime and are making some efforts in this direction. The unanimous conclusion by the stakeholders is the fact that the key for this economic acceleration is with MSMEs.
MSMEs & Job Creations
Yes, MSMEs or the small business segment is the only pool which has the potential of facilitating the huge requirement of job creation.
Centre for Monitoring Indian Economy (CMIE) recently claimed that the country added just 1.43 million jobs in 2017, well experts also noted that this number could well be around 15 million. The government, and policy think tank NITI Aayog, seem to have taken a middle path with claims of 7 million job creations during the year. Noted economist Surjit Bhalla as elaborated about this gap and mentioned this data in one of his recent columns.
Now, the issue of job creation and the role of MSMEs in the overall economic acceleration has become a priority for government especially with General elections season around the corner. Leading political parties of the country have taken up the aspects of job creation and status of Indian MSMEs on the centre stage.
Job Creation, MSMEs and Economic Acceleration: Action Plan of 2019 Elections
Well, the issue of job creation from the perspective of elections can be well understood by the fact that says, there were 100 million new voters in the last general elections of 2014 and there will be 100 million new ones in 2019. This data is not just a data, this is human capital which requires formalization, financialization, urbanization and industrialization.
Now, we must have a realistic approach towards ensuring the job availability to this huge segment of youth. Our realistic approach clearly defines it is beyond the capacities of government to give jobs to all these people. But what Government can surely do it to create a pro-business environment which ultimately ensures job creation for the Indian youth. So, the situation can only be tackled through MSMEs and this segment needs support from the government.
In fact, a section of experts is of the view that the informal labour market in India remains a huge drag as it does not come with social or job protection, which effectively impacts the productive use of almost 90% of the workforce.
According to the recent payroll data, which claimed the creation of 3.46 million jobs in six months ended 28 February, is a good beginning to streamline jobs statistics. But there are debates among experts on the authenticity of this data.
A published report on Economic Times based on an analysis of over 1,600 corporates, mainly smaller companies(SMEs), with net sales of less than Rs 500 crore, have witnessed a contraction in employment growth, while larger companies, with over Rs 500 crore sales, had a positive employment growth in FY18.
With a 14 per cent growth, the finance sector led the pack in job creation, followed by retail (13.05 per cent), construction (9.6 per cent), infrastructure (9 per cent) and ratings (8 per cent), according to the report.
Well, India is at a threshold of transformation while the economic turbulence is already undergoing. Having said this, while talking about economic acceleration it becomes all the more important to include MSMEs in the scheme of things for ensuring job creation for Indian youth. The policymakers should take this seriously, as MSMEs have started becoming part of several public speeches by the political leaders in their run for 2019 Elections.