Do you think that the recent change in definition of MSME as a part of Atmanirbhar package provides incentives for the growth of industries? Comment (200 Words)
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IAS Parliament 4 years
KEY POINTS
· As part of its Aatmanirbhar Bharat package, the Indian government announced several far-reaching reforms. One of them was a change in definition of micro, small and medium enterprises (MSME).
· The distinction between manufacturing and service enterprises was abolished.The threshold amounts were increased. When the changes were notified, the government increased the investment and sales turnover thresholds for medium enterprises. These changes have the potential to be transformative, but they may not work out as expected.
· As they stand, the policy changes may achieve the perverse effect of keeping manufacturing units micro and small, while service-sector enterprises stand a slightly better chance of achieving growth without worrying about losing the concessions that accrue to them based on their micro or small or medium status.
· When the country is aiming to become self-reliant, attract businesses seeking to relocate out of China and create employment in, say, light manufacturing industries, this policy change would achieve the opposite.
· A casual look at the classifications that other developing countries like Brazil, China and Indonesia have adopted suggests that India has done better by keeping them simple and eliminating the distinction between manufacturing and services.
· The purpose of classification is to encourage businesses to grow, generate employment, and be more productive by investing in technology, rather than focussing on remaining small to avail of special financing and tax concessions.
· Therefore, the government should wholeheartedly encourage them to grow without their fearing a loss of concessions consistent with their status. The myopic mindset of worrying about offering tax breaks or lower interest rates on loans extended to these enterprises for a longer period than planned should be shed.
· In general, the government’s attitude should be not to punish them for growing but reward them. In a post-covid world of scarce growth, policy experiments need to be pursued with larger hearts and more open minds.
· The government of India should allow enterprises to remain MSMEs even if only one of the two criteria is met. Only when an enterprise has a higher investment and has achieved a higher sales turnover than defined should it graduate to the next category, or out of the MSME framework entirely in the case of medium enterprises.
Ananta Kumar Muduli 4 years
sir good morning,
pls review
IAS Parliament 4 years
Definition about MSME, revised definition are not needed, avoid writing general points. Keep Writing.
Soni Kumari 4 years
Please review sir
IAS Parliament 4 years
Try to focus more on incentives that is the major part of the answer. Keep Writing.
Sanjeev Kumar Singh 4 years
Please review
IAS Parliament 4 years
Try to suggest measures for better growth of MSMEs. Keep Writing.
aswin 4 years
please review
IAS Parliament 4 years
Good attempt. Keep Writing.
