What is the issue?
In India ease of doing business has been not stressed on MSMEs, it needs to be addressed.
What are the issues with MSME?
- It accounts for about a third of GDP and the bulk of employment, but they have less investment boosts and more restrictions.
- It operates in a universe that is mostly outside the formal economy and the ambit of data collection.
- It is most vulnerable to local-level corruption involving the labours and factory inspectors.
- Entrepreneurs in this sector are prone to participate in destabilising systems as an instinctive survival mechanism.
- Activities of MSMEs are captured imperfectly in national statistics it is hard to understand the depths of their crisis.
How government moves are hitting the sector?
- Demonetisation - It was a straight hit, especially for micro-enterprises that operate on a daily cash basis.
- With local markets dislocated for lack of cash, small units abruptly shut shop and sullen jobless youths were seen streaming back to the villages.
- GST-The network connectivity and urged form submissions have hit the sector hard.
- The MSME sector’s sufferings are worsened because the bulk of them are outside the cut-off for this single-market tax.
- MSME exporters are finding themselves saddled with costs owing to an oversight in GST planning.
- Taxing branded food products is discouraging brand-building at this lowest level of the business value chain.
Source: Business Standard
