Report of the MSME Ministry about the Efficiency of Indian MSMEs

According to the annual report by MSME Ministry, it was found that there had been improvement in efficiency of the MSMEs in India in terms of production versus employment. The report revealed that there was a double percentage increase in production when compared with the percentage rise in the number of persons employed in 2008-09.

It was reported that an addition of 12.37 lakh new enterprises in MSME sector was observed. The production in the MSME sector was estimated as Rs. 8,80,805 crore in 2008-09 which resulted in percentage rise of 11.4 percent. Where as the number of persons employed in the same period was increased to 659.35 lakhs by 5.2 per cent.

The reason for the efficiency was found to be the better utilization of capacity and implementation of more efficient practices by the sector. The other factor was the rise in prices of the finished goods. The MSME sector produced 6,000 products that include traditional items to a range of high-tech items. It was found that the MSME sector contributed 45 per cent of the manufacturing output and 40 per cent of the exports of India.

It was recommended by the Task Force on MSME that implementation of about 20 percent procurement by public sector would be helpful. During the first three quarters of 2009-10, the government purchases from the Khadi and Village Industries Commission (KVIC) reached half the levels of last year at Rs. 16 crore. A decline in the purchases was found where the government purchases were at Rs. 34 crore in 2007-08 and Rs. 31.8 crore in 2008-09.