National & International Council For Scientific Research
(An Autonomous Organization for Human Resource Development , Industrial and Scientific Research)
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The National Common Minimum Programme

NICSR,,

Research Matrial Team,,

Among the six basic principles of governance underlying the National Common Minimum Programme (NCMP) of the Government, sustained “economic growth in a manner that generates employment” has a pride of place. The NCMP also describes the small scale industries as “the most employment-intensive segment”.

The small scale industries of India (including the tiny industries and small scale service and business entities) have a long history of promoting economic growth that is employment-oriented and spatially widespread, and hence inclusive.

This is thus rightly called the segment which provides employment next only to agriculture. A simple analysis shows that the employment intensity of the segment (registered units) is 1 person for every 1.49 lakh of rupees invested in fixed assets, as against 1 person per Rs. 5.56 lakh in the large organised sector. And, the rate of growth of employment in this segment is well above that of the population of India (1.5 per cent) or, that in the large industries segment (0.85 per cent).

The contribution of this segment to the economic sinews of the nation is no less significant. Nearly 39 per cent of the gross manufacturing output and 34 per cent of the exports of India arise from these enterprises. During the last four years of the Tenth Plan, the output of the segment has recorded a real growth rate of 8.87 per cent annually. Over six thousand products manufactured by these include several sophisticated items used in high technology areas like nuclear power, missile and space programmes, information technology, biotechnology, etc. The level of exports by this segment also testifies to its overall competitiveness in the global markets.

Yet, the segment does not constitute a homogeneous universe and a large majority of the units faces several challenges.

By enacting the Micro, Small and Medium Enterprises Development Act, 2006, the Government has recently fulfilled one of the needs felt and articulated by this segment for long. This Act seeks to facilitate promotion and development and enhancing competitiveness of these enterprises. It provides the first-ever legal framework for recognition of the concept of “enterprise” (comprising both manufacturing and services) and integrating the three tiers of these enterprises, namely, micro, small and medium.

The Government has also announced a Policy Package for Stepping up Credit to Small and Medium Enterprises assuring, inter alia, a 20 per cent year-on-year growth in credit flow.

Significant improvements have also been made in the Credit Linked Capital Subsidy Scheme for Technological Upgradation, leading to a spurt in the number of units availing of its benefits.

In order to address the continuing challenges of this sector the NCMP declared, therefore, that a “major promotional package” would be announced for this segment to provide full support in the areas of credit, technological upgradation, marketing and infrastructural upgradation in major industrial infrastructure.

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