The manufacturing sector is the second largest employment generating sector of Odisha which constitutes about 65 per cent of the share of industrial sector, almost one fourth of the State’s GSDP in 2012-2013.
A major part of the manufacturing sector is micro, small and medium enterprise (MSME) which includes different categories such as repairing and service, food and allied products, engineering and metal, textile, forest and wood based products, livestock and leather, electrical and electronics, rubber and plastic, paper and paper products, chemicals and allied products, etc. It generates maximum employment next to agriculture and has export potential.
The Micro, Small and Medium Enterprise Development Act, 2006 came into force in 2006. It provides conceptual and legal framework for this sector.
The Odisha Micro, Small and Medium Enterprise Development Policy 2009, published in the State Gazette in February 2009, aims at the growth of MSMEs and thereby widening opportunities for employment generation, revenue augmentation, and exports with focus on sustainable and inclusive industrial growth and balanced regional development.
The statistical evidence shows the growth of MSME in Odisha is not at
par with the national and international standard. The State MSME Department sources say about 1, 23,292 MSMEs have gone into production till March 2013 and invested Rs 4, 96,959 lakh which generate employment for seven lakhs persons. The districts of Sundargarh, Cuttack and Ganjam have more enterprises and also generate employment with higher amount of investment in comparison to other districts but backward districts such as Malkanagiri, Deogarh, Nuapada, Boudh, and Gajapati have very less number of units as well as employment and investment in comparison to other districts.
The categories like food and allied products, repairing and service enterprise, textiles, glass and ceramic, engineering and metals, forest and wood based enterprises employ more number of people and there is scope of improvement in areas like livestock, horticulture, minor forest produce, seafood products, plastic and electrical and electronics, etc.
This shows the relatively backward areas having SC and ST population have not been explored with the inherent potential of natural and human resources to set up micro, small and medium enterprises to boost local employment and bring down the regional imbalances in the State.
There are also industrial hubs and Special Economic Zones(SEZ) coming up in the State such as Kalinganagar, Angul, Jharasuguda, Joda and Badbil, Paradip, Rourkela, Gopalpur, Dhamara, Choudwar, Rayagada, Kalahandi and Chatrapur etc where there are tremendous potentialities for promoting MSME involving the local people which can increase production and generate employment as ancillary and downstream industries.
The State Government has made provisions in its MSME Development Policy, 2009 for reservation of minimum 20 per cent land in all industrial estates, industrial parks, industrial corridors, and banks for MSMEs. But the Government has not yet provided adequate attention to promote MSMEs by providing land, credit facility, technological and marketing support.
It has been routinely complained that the MSMEs in rural and urban areas are being harassed during registration and have to spend time in coordinating with banks, DICs and other related Government departments for clearance. There is a lack of dedicated financial institution in the State to finance MSME while it cannot brushed aside that most of the scheduled commercial banks are charging higher rate of interest, with provision of collateral security which has been difficult for many of the prospective entrepreneurs of poor economic background and socially marginalised groups. The poor people still depend on informal credit systems and Self Help Groups (SHG) to get finance for economic activities. Many of the economic activities run by a number of SHGs are not economically viable and do not expand due to lack of adequate financial as well as facilitation support to make the units viable. There should be new trades and innovations with use of modern technology and that should be suit the market needs. Though it has been told in the policies that women and SC and ST entrepreneurs will be promoted but this has not been reflected in the implementation process of the Government departments and financial institutions operating in the State.
The Scheduled Castes and Scheduled Tribes Finance Development Corporation ltd and SCs and STs Development Department have very poor coordination and linkages with the MSME Department.
The provisions of SCSP and TSP should be integrated for development of MSMEs among the SCs and STs of the State. It seems the State focus is more in setting up large and mega mineral based industries and mining which generates very less employment, where as the MSME sector which contributes more in terms of GDP and having potential of generating employment is being neglected.
Recently the Prime Minister in his speech during this Budget Session in Parliament said, the SMEs form the backbone of our economy and accounts for a large portion of our industrial output and employment. The BRICS countries such as China, Brazil, and Russia, are doing well in manufacturing sector in terms of providing employment where as a vast majority of population in India depends on agriculture.
The growth of employment in manufacturing sector is not changing like others. India’s share in world manufacturing is only 1.8 per cent where as it is 13 per cent for China.
The Planning Commission of the Government of India in the 12th five year plan made details strategy of manufacturing sector growth plan for the country. A number of studies such as ‘Caste and Entrepreneurship in India’ by Harvard Business School and ‘Caste and Business and Industry in Modern Nation’ by Prof Thorat, Prof Jodhaka, and Harish Damodaran, have established that SCs and STs are considerably underrepresented in entrepreneurship sphere even in States having progressive policy for their upliftment. SCs and STs of Odisha in comparison to others are not being adequately represented in the MSME sector in spite of their proportionate representation in politics due to provisions of reservation at different level though they constitute about 40 per cent of the total population of the State. Their access to economic activities has not been democratized due to social discrimination, which also affects their economic participation in the absence of protection against economic exclusion.
There are a number of programmes and institutions under the Union Ministry of MSMEs for the promotion of MSMEs in States and affirmative provisions are being introduced to promote SCs, STs and women entrepreneurs. There is provision both in Central and State policies about capital investment subsidy at 10 per cent of the Fixed Capital Investment (FCI) subject to an upper limit of Rs 8lakh to a new enterprise and 12 per cent of FCI maximum up to Rs10 lakh to an enterprise set up by SC, ST, PWD, women and technical degree and diploma holder entrepreneur. The policies also say about tax relaxation in case of women entrepreneurs. The procurement policy for MSEs says that 4 per cent will be earmarked for procurement from MSE owned by SC and ST enterprises. The Government has set up credit guarantee fund to provide relief to entrepreneurs who are unable to pay collateral security to avail loan. There are credit linked subsidy schemes such as the Prime Minister Employment Guaranty Programme, which have provisions of subsidy of 35 per cent for the weaker section for service and manufacturing projects cost of Rs 10 to Rs 25 lakh. The States having clusters with more than 50 per cent of SC, ST, and women entrepreneurs will have special Central assistance for infrastructure development.
But it is unfortunate that many of our policy discourses are not being grounded due to lack of political will, bureaucratic apathy, poor planning and lack of socio-cultural motivation among people to be entrepreneurs. Odisha with huge potentiality has been suffering from lack of leadership in economic sector and non representation of its majority of marginalised communities in modern economic activities who are still in the traditional activities for their survival. They are officially encouraged to become beneficiaries of welfare programmes and subsidy culture but not as entrepreneurs to get engaged in productive activities. The State Government should build infrastructure for setting up MSME and promote institutions like National Institute for Entrepreneurship and Small Business Development (NIESBUD) to develop the entrepreneurial skill of youths and provide them all kinds of handholding support.
There should be dedicated financial institutions and business facilitating agencies to incubate the prospective entrepreneurs from marginalized sections in backward areas. The areas having advantage of natural resources should have special institutions to promote MSMEs.
(The writer is a rights activist, who can be reached at ojaabbsr@gmail.com)