Skill, labour, and talent for MSMEs: While the micro, small and medium enterprise (MSME) sector has been among the worst-hit due to the pandemic, the data on job cuts since March last year is still unknown. In fact, the data is not ‘maintained’ by the government “as MSMEs are present in both formal and informal sector,” said MSME Minister Narayan Rane. In reply to a question in the Rajya Sabha on the number of people employed in MSMEs who had lost their jobs during the pandemic since March 2020, Rane said, “As MSMEs are present in both formal and informal sector, data regarding job loss is not maintained by the government of India in Ministry of Micro, Small and Medium Enterprises.”
“I believe nobody can record that number for the entire country except the government. It would probably be difficult for any MSME body or council as well including us to collect the data on the number of job losses or unit shutdowns as a large number of units are in the informal sector. Even in the formal sector, it would be difficult to ascertain the overall data,” Mukesh Mohan Gupta, President, Chamber of Indian Micro Small & Medium Enterprises told Financial Express Online.
According to the analysis of the latest data from the Centre for Monitoring Indian Economy (CMIE), over 5 million people employed in formal and informal sectors in India had lost their jobs in October as total people employed in October stood at 400.77 million in comparison to 406.24 million in September. The unemployment rate had jumped to 7.75 per cent in October from 6.86 per cent in September. While the urban joblessness rate had declined to 7.38 per cent in October, the rural joblessness rate increased to 7.91 per cent. Importantly, the labour force participation rate declined from 40.66 per cent in September to 40.41 per cent in October.
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“When the government cannot maintain data on job losses, it would be difficult for anyone else. Even with respect to the total number of MSMEs, the 6.3 crore figure is around five-year-old. There is no latest data on MSMEs in the formal sector as well along with sector-wise information,” head of a Delhi-based MSME association told Financial Express Online. The 6.33-crore MSME figure, according to the MSME Ministry’s annual report 2020-21, was based on the National Sample Survey (NSS) 73rd round, conducted by National Sample Survey Office, Ministry of Statistics & Programme Implementation during 2015-16.
Importantly, with respect to the number of MSMEs that had shut their units down due to the pandemic, former MSME Minister Nitin Gadkari had given a similar response during the Budget session this year. “As MSMEs are there in both formal and informal sector, data regarding temporary or permanent closure of the units are not maintained by the government of India in MSME Ministry.” Similarly, in September 2020 also, former MSME MoS Pratap Chandra Sarangi had told Parliament on the number of MSME units closed during March-August 2020 that “no such record is available” and moreover, no data with the government on the number of MSMEs closed down from FY15 to FY20 was recorded.
Likewise, the data on the number of startups shut down due to the pandemic is not maintained by the Department for Promotion of Industry and Internal Trade, Commerce Minister Piyush Goyal had told Rajya Sabha in September last year.
“Government has the mechanism to collect data on MSME job losses and others but the mechanism may or may not be effective. However, at least they have certain data on the table. If they are not able to collect the data, then it means there is a genuine challenge in this exercise. For example, there are millions of micro and small establishments in retail and other categories that don’t reflect anywhere. Job losses were there in manufacturing but it was temporary while there is still stress and losses in hospitality, entertainment, and other service businesses. There has been no mechanism in place to collect data from these sectors,” Umesh Balani, Chairman, MSME Development Council, Assocham, and MD and CEO, Rotomag Motors and Controls told Financial Express Online.
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The MSME Ministry had earlier this month invited bids from government organisations, institutions, and enterprises for “conducting a two-month study on assessment of sick or closed MSMEs in the past five years and Covid impact,” according to a notice by the Office of the Development Commissioner inviting online tender. The purpose of the study, as per the notice, stemmed from the fact that “increasingly many MSME units turn sick, leading eventually to their closure.”
The MSME Ministry maintains data of registered MSMEs through Udhyam Portal, Udyog Aadhar Registration, and Entrepreneur Memorandum-II. However, in order to cater to the needs of sick units or closed units and to figure out reasons for their sickness or closure, the government faces certain limitations due to lack of accurate data, the notice read. In fact, according to the government, the current data source does not provide enough information on sick or closed units.