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    MSME sector: Job creation should be a cornerstone of all policy making

    MSME sector: Job creation should be a cornerstone of all policy making

    MSME sector: Job creation should be a cornerstone of all policy making
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    By Raman Sobti   IST (Published)

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    In order to devise an approach that is collective and collaborative, and keeping in mind the inherent role of the Ministry of MSME and its presence across the country through its attached offices, the Ministry of MSME can play the role of a nodal ministry that becomes an aggregator of government initiatives directed at MSMEs.

    The Indian economy with a GDP of $2.6 trillion is the sixth largest in the world and a prime engine for global economic growth. It is home to 1.35 billion people, making it as the second most populous country. It is estimated that by 2027 India is likely to have the world’s largest workforce with a billion people aged between 15 and 64. This brings the world’s largest democracy at an important crossroad of income growth and job creation amidst rising global tension of populism and protectionist trade policies.
    Domestically, the agriculture and MSME sectors are the biggest employment generators in India. The MSME sector alone accounts for employing 40 percent of India’s workforce and has grown at the rate of 3.6 percent between 2006 and 2016. The MSME sector is reported to have added 1.5 crore job opportunities per annum since the last four financial years. However, in order to keep up with the aims and aspirations of India’s burgeoning youth population, the country has to deliver more. The major ministries governing the economy have to function both strategically and holistically to ensure that India’s large demographic dividend realises its potential through meaningful employment.
    The onus of job creation does not lie with any particular ministry or department, but it should be a cornerstone of all policy making. This could include building infrastructure, easing the way to do business and most importantly, improving the quality of our human capital which includes healthcare and education. This requires the right infrastructure and right implementation at the right time.
    Traditionally, India has fared better in terms of infrastructure creation, but has generally struggled when it comes to service delivery. Moreover, the implementation of policies and programmes has not been as inclusive as envisioned, and therefore has on occasions fallen short of public expectations. Now, with technology advancements, ICT based delivery and rising awareness, public expectations from government services are increasing. Therefore, effective service delivery is of paramount importance. It can not only increase inclusiveness and quality of life of the intended beneficiaries but also create opportunities for the workforce during implementation of our policies and programmes.
    In order to improve implementation, the government needs to take a lifetime view of a citizen and not a one year or a single transaction view. A youth assisted in their formative years becomes an asset for the nation while the cost of an unemployed person over the course of their lifetime can run into crores. This is an investment approach as opposed to the traditional fiscal approach and it is time citizens are viewed from this perspective.
    In order to do so, the following steps are being recommended to ensure that the MSME sector receives proper hand-holding for increasing growth:
    Creating self-sustainable service delivery centres:
    Government delivery agencies should be operated as profit centres on a self-sustainable model. The implementing agencies should be evaluated on the basis of their achievement of key performance indicators and may accordingly be incentivised.
    Implementing effective reskilling programmes: The government should augment the existing skill development programmes and incentivise existing enterprises to provide practical industry experience to candidates, thereby making them job ready and easily employable.
    Charting out better incentive for government employees: Government employees may be given targets and may subsequently be incentivised based on their performance against defined parameters. This would bring about greater efficiency and accountability in the system, and help in achieving the goals faster.
    Making government department and agencies work together instead of working in silos: The government should adopt a holistic approach towards job creation, and the various ministries should work hand-in-hand with each other to bring out a plausible change. Each ministry working within its separate areas of expertise is going to add to operational and implementation delays. Job creation is an issue of national importance, and it will be difficult to achieve the target unless it becomes a holistic and collaborative effort from all the relevant ministries in the government. Further, as mentioned before, the government delivery mechanism has to be sustainable and target-oriented to achieve the targeted results.
    In order to devise an approach that is collective and collaborative, and keeping in mind the inherent role of the Ministry of MSME and its presence across the country through its attached offices, the Ministry of MSME can play the role of a nodal ministry that becomes an aggregator of government initiatives directed at MSMEs.
    We all know that there is no magic bullet to create the jobs that are needed. It is about doing the small things right. Changing our outlook and adopting a new approach can be the first step towards it. When this happens, it will not be about creating a definite number of jobs; it would be about enabling citizens to do what they want. In the end, isn’t this what a democracy aims to achieve?
    Raman Sobti is national leader, KPMG Enterprise, KPMG in India
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