Performance of Small Scale Sector in India: A Three Dimensional Analysis

Abstract

Micro, Small and Medium Enterprises (MSMEs) all over the world have been recognised as silent drivers of a nation’s economy. Their role in the economic and social development of a country is well established. The MSME sector is a breeding ground of entrepreneurship, often driven by individual creativity and innovation at grass root level and shows dynamism in terms of Micro, small and medium enterprises (MSMEs) have been accepted as an engine for economic growth and equitable development. Developing countries such as India, China, Pakistan, Malaysia and many other South Asian countries consider small and medium enterprises as backbone of their economy. The MSMEs constitute over 90 percent of enterprises in most of the economies and are instrumental in generating more job opportunities and high industrial production. In India, after agriculture, the MSME sector provides the maximum opportunities for both self-employment and employment in the country. In fact, the employment potential of this sector is unmatched by any other sector of the economy. These enterprises have been playing a significant role in overall economic development of the country, where labour is abundant in nature and millions of people are unemployed and underemployed. MSMEs are the second largest manpower employer, after agriculture. These enterprises play a very important role in socio-economic growth and development of the Indian economy on account of their inherent advantages like low capital requirement, high employment generation, dispersal of industrial activity, utilisation of locally available resources and expanding entrepreneurial base. The promotion of this sector, underlines with twin objectives, namely, employment generation and eradication of poverty. This paper discusses on three dimensions of performance of small scale sector on economic development in India viz., Employment Generation, Contribution to Gross Domestic Product (GDP) and Export Earnings. The analysis of 10 years (2003- 2013) reveals that a significant increase and improvement has been made by this sector in these dimensions. Further, this sector requires adequatesupport to contribute in the overall development of the economy