Skill, labour and talent for MSMEs: The number of people employed by Udyam-registered MSMEs increased massively during Covid, according to the government data. In fact, the number of people employed in FY21 by MSMEs had more than doubled from pre-Covid FY20 and was also significantly higher than the expected number of job losses in the sector because of the pandemic. Moreover, the highest number of people employed was recorded in FY22 in the last five financial years.
The data shared by MoS MSME Bhanu Pratap Singh Verma in a written reply to a question during the ongoing second part of the Budget session of Parliament showed that 43,37,444 people were employed in MSMEs during FY20. This increased by 106 per cent to 89,53,149 in FY21 and by 4.9 per cent to 93,94,957 in the current financial year – highest during the FY18-FY22 period. 51,98,478 and 38,55,539 people were employed by MSMEs in FY18 and FY19 respectively. Currently, there are 77.35 lakh MSMEs registered on the Udyam portal, up from 25 lakh till March 2021.
“The government should have given the data on the number of enterprises vis-a-vis the number of employment generated. The growth in people employed in FY21 seems to be in parity with the number of registrations increasing on the portal. Hence, this might not be the number of new employment created. The inclusion of wholesalers and retailers into the MSME category in July last year could also be the reason for the jump this year. Nonetheless, MSMEs generally employ less than two people in a year,” Anil Bhardwaj, Secretary-General, Federation of Indian Micro Small & Medium Enterprises (FISME) told Financial Express Online.
Comments from the office of MoS MSME weren’t immediately available for the story.
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M H Bala Subrahmanya Professor at Department of Management Studies, Indian Institute of Science – Bangalore echoed Bhardwaj. “Many MSMEs were temporarily shut during Covid. However, as restrictions relaxed, MSMEs reopened their businesses. With recovery, many existing MSMEs would have registered on the Udyam portal as urged by the government along with new MSMEs and so the people employed in these businesses combined got reflected in the data shared by the government,” he said. Hence, the number of people employed automatically jumped after these MSMEs registered on the Udyam portal in 2020 vis-a-vis 2019 when the portal didn’t exist, Subrahmanya added.
Maharashtra with 11.23 lakh people employed by its Udyam MSMEs followed by 8.54 lakh people employed by MSMEs in Tamil Nadu, 8.47 lakh in Uttar Pradesh, 8.29 lakh in Telangana, and 8.20 lakh in Rajasthan were the top five states in the number of people employed by their MSMEs during FY22.
Verma added that the MSME Ministry implemented various schemes to increase employment opportunities of the MSME sector in the country. These included Prime Minister Employment Generation Programme (PMEGP), Micro and Small Enterprises-Cluster Development Programme (MSE-CDP), Scheme of Fund for Regeneration of Traditional Industries (SFURTI), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE).
However, post-Covid, multiple surveys had indicated the Covid impact on jobs in the MSME sector due to lockdown-induced restrictions on business operations and movement of people including factory workers. For instance, a survey by MSME body Consortium of Indian Associations (CIA) last year involving 81,000 self-employed individuals and SMEs through its 40 partner SME associations said that 59 per cent respondents had reduced their staff or sacked or removed them in FY21 in comparison to the pre-Covid period. Another survey by community social media platform LocalCircles involving over 7,000 responses from MSMEs, startups, and entrepreneurs had reported that 78 per cent MSMEs and startups had cut workforce during March – October 2020 period.
Importantly, there is no latest data available on the total jobs created by the MSME sector so far in India. The most recent one was 11.10 crore jobs as per the National Sample Survey (NSS) 73rd round conducted during the period 2015-16. These included 360.41 lakh jobs in manufacturing, 387.18 lakh in trade, 362.82 lakh in other services in the rural and urban areas across the country.