Ease of Doing Business for MSMEs: Tamil Nadu’s sector-wise contribution towards Gross State Domestic Product (GSDP) has remained stagnant in the last 10 years, reported The Federal quoting data from the Reserve Bank of India.
The services sector accounts for 53.9 per cent of the GSDP, followed by the manufacturing sector with a 20.2 per cent share. Other industries (including Micro, Small and Medium Enterprises) contribute 13 per cent and agriculture sector accounts for 12.9 per cent of the total GSDP, said the report. It noted that the services sector has witnessed a maximum growth of 2.9 per cent, followed by the manufacturing sector at 0.1 per cent.
On the other hand, the agriculture sector has recorded a decline of 0.6 per cent while the share of other industries in GSDP fell by 2.5 per cent.
Comparatively, the contribution of the services sector in Karnataka’s GSDP is 65.9 per cent and that in Maharashtra is 59.3 per cent.
An additional chief secretary informed The Federal, “Tamil Nadu saw a number of automobile companies setting up their units within the state and mostly in and around Chennai. That is why the share of manufacturing industries has been around 20 per cent. Due to lower growth in the economy not many new companies were ready to set up units and the Covid lockdowns since 2020 March have also affected the manufacturing industries growth.
Other industries, especially MSMEs, have witnessed the highest negative growth in the state. “Tamil Nadu has the maximum number of MSMEs and this section of the economy has been hit very badly due to the 2016 demonetisation. Many MSMEs had to close as they could not do business without cash. After demonetisation came the GST in 2017 and many MSME faced losses as they came under GST regime,” the official added.
The MSMEs were impacted the most due to the 2020 Covid-induced lockdown, leaving many unemployed and several factories shut, noted the official, adding that the owners of small factories resorted to working in various offices or bigger industries.
The report highlighted that the service sector had an immense contribution to the state’s economy. Despite a slow rate as compared to other states like Karnataka (65.9 per cent) and Gujarat (37 per cent), the service sector’s share has been growing.