Revitalising the MSME and food processing sectors in Bihar and Andhra Pradesh, can boost economic growth, raise farmers’ incomes and strengthen food security

Both Bihar and Andhra Pradesh have been advocating for special government packages, emphasising the importance of micro, small and medium enterprises (MSME) as a key driver for development. The governments of these states, as well as the central government, recognise the significant potential in the MSME sector, particularly in food processing, and have prioritised it accordingly. Chief Ministers N Chandrababu Naidu and Nitish Kumar share concerns over the stagnation of the MSME sector in recent years, and both are committed to reviving it through various initiatives.

In Andhra Pradesh, Chief Minister Naidu has acknowledged the struggles faced by MSMEs over the past five years, emphasising the need to revitalise the sector. He highlighted the slow progress of MSME parks and raised concerns over pending government incentives, which have hampered the sector’s growth. His administration aims to address these challenges by ensuring the release of overdue incentives and enhancing the participation of farmers in MSME parks. By linking farmers directly to these parks, Naidu envisions a system where agricultural stakeholders can benefit directly from business opportunities.

Similarly, Bihar’s Chief Minister Nitish Kumar has voiced concerns about MSMEs and infrastructure development in his state. Kumar has aligned with Naidu in recognising the critical role of MSMEs in driving economic growth and ensuring regional prosperity. The coincidence of Bihar’s representation in the central government, with ministers like Jitan Ram Manjhi and Chirag Paswan, has further fueled efforts to secure the necessary support for these initiatives. Prime Minister Narendra Modi has encouraged these ministers to focus on fostering connections between DWCRA groups and MSMEs to enhance economic opportunities for small enterprises.

A significant allocation of Rs 100 crore as a credit guarantee for MSMEs has been announced, underscoring the importance of ensuring financial support for these small businesses. However, meaningful progress in the MSME sector is unlikely unless strong linkages are created between MSMEs and the food processing industry, as these sectors are highly interdependent.

The food processing industry, in particular, has been recognised as a powerful engine for economic growth. India is one of the largest producers of various food items, including milk, fruits, vegetables, millet, tea and fish. This creates a robust foundation for the growth of the food processing sector. India’s position as one of the largest and fastest-growing economies in the world is bolstered by the significant role played by the food processing industry in ensuring food security and driving economic expansion.

The Ministry of Food Processing Industries reported that by the end of FY 2022-23, the sector contributed 7.66 per cent of the gross value added (GVA) in manufacturing and 8.45 per cent of the GVA in agriculture. Foreign direct investment (FDI) in the sector has been strong, with Rs 5,290.27 crore in 2021-22 and Rs 2,934.12 crore in 2020-21. However, challenges remain, as processed food exports saw a 17 per cent decline in FY24, dropping from $13,078.3 million in the previous fiscal to $10,881.81 million.

To address these challenges and promote growth, the government has implemented several initiatives, including the Pradhan Mantri Kisan Sampada Yojana (PMKSY), Production Linked Incentive Scheme for Food Processing Industries (PLISFPI), and Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME).  By increasing processing levels and creating employment, these programs also aim to raise farmers’ incomes.

(The writer is a senior journalist; views are personal)