Kochi-based Institute of Small Enterprises and Development (ISED) has stressed the need for tweaking the country’s MSME policy from a populist track to a more pragmatic approach to address the latest imperatives of sustainable development.

Apart from taking forward MSME policies in a stand-alone fashion, they need to be strongly woven into the key growth strategies of the country, said PM Mathew in the paper titled ‘Is India’s MSME and Entrepreneurship ambitions a bit obfuscated?’.

In India’s macroeconomic policy and vision for the centenary year 2047, the strategic role of the private sector is crystal clear. Given the constraints of the government on the investment front and capital formation, the private sector is expected to have a significant place.

Within the private sector, the role envisaged for the MSME is crucial. However, a strategic translation of such a policy approach into practice requires a clear perception of the present and the potential role of entrepreneurship and SMEs, Mathew said.

India’s ambitions relating to MSME and entrepreneurship become relevant against the backdrop of the new policy approach being discussed at NITI Aayog wherein ‘district’ is going to be the focal space of programme implementation, he said.

‘Cooperative federalism’

The question and concern on entrepreneurship development and SME promotion become crucial against the current experience on policy perceptions in the States and of programme implementation within the overall framework of ‘cooperative federalism’, ISED said.

National Sample Survey Office report 2018 pointed out that the States with the highest percentage of self-employment among the working population are Gujarat at 48.3 per cent, Rajasthan at 47.9 per cent, Andhra Pradesh at 47.7 per cent, Maharashtra at 47.5 per cent and Tamil Nadu at 47.3 per cent.

ISED paper also said the growth of the bottom layer of the enterprise system in the country, including SMEs and self-employment, is shaped and sustained by growth linkages rather than by policy inducement. Such a finding has significant implications for the new strategic approach based on districts.