Job loss! Demonetisation, GST led to dip in jobs, profits for MSMEs, traders: AIMO survey

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Updated: December 17, 2018 12:12:10 PM

The AIMO said that MSMEs witnessed a rough weather since 2014 and there is a need to pay attention to revive the sector with a lot more urgency and seriousness.

RBI to set up panel to look into problems of MSMEsDue to high sentiments and expectations from the Narendra Modi-led government, 2015-16 witnessed growth in all areas. (Reuters)

The micro small and medium enterprises (MSMEs) and traders have registered a huge decline in jobs and profits in the last 4.5 years, particularly after the roll-out of GST and demonetisation, according to the latest survey by the All India Manufacturers’ Organisation (AIMO). It analysed 34,700 samples from traders and MSMEs across India and raised many red flags on the critical condition of MSMEs and traders.

The AIMO, which represents over 3 lakh MSMEs engaged in manufacturing and export activities, said in the survey that MSMEs witnessed a rough weather since 2014 and there is a need to pay attention to revive the sector with a lot more urgency and seriousness.

There was a job loss of 32% in the micro segment, 35% in the small businesses segment, 24% loss in the medium businesses segment and 43% in the trader segment. Worst-hit sectors dominated by unorganised labour. These included stitching units, matches, plastic, crackers, dyeing units, stone units, tanneries, job work units and printing companies.

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Also, the operating profits of traders fell drastically by about 70% since 2014, K E Raghunathan, president of AIMO, told The Indian Express. “Micro industries show a 43% drop in operational profits, small-scale industries report a dip of 35% and medium scale industries faced a drop of 24%. This is huge, this deserves immediate attention as many sectors within these traders and MSMEs have already gone down beyond a revival,” Raghunathan added.

Due to high sentiments and expectations from the Narendra Modi-led government, 2015-16 witnessed growth in all areas. “It went down next year due to demonetisation. The rollout of GST, due to finance availability and higher outstanding with government payments and compliance matters all worsened these sectors in the next three years,” he said.

The most popular schemes launched by the government in the past 4-5 years such as Digital India, Make in India, Skill India and Startup also failed to help traders and micro and small industries. Medium scaled industries though felt effects of Digital India initiatives. Also, the survey found that those who participated in the study acknowledged the current government for being corruption-free, pushing online transactions and having transparency.

The challenges that micro, small and medium scale industries faced included profitability, government documentation, sourcing funds, availing incentives such as subsidies, and raw material costs. On the other hand, traders reported that profitability, sales and sourcing funds were the key challenges they had.

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