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49,000 MSMEs shut down in 10 years rendering 300,000 people jobless
Industry News- Jul 26,24
According to the Ministry of Labour and Employment, the estimated unemployment rate for people aged 15 years and above was 4.2% in 2020-21, 4.1% in 2021-22, and 3.2% in 2022-23.
"The closure of nearly 50,000 micro, small, and medium enterprises (MSMEs) over the past decade has left over 300,000 people jobless, the government informed the Lok Sabha. Maharashtra was the most affected, with 12,233 MSMEs shutting down and causing 54,053 job losses.
In a written reply, the Minister for Micro, Small, and Medium Enterprises, Jitan Ram Majhi, stated that out of the million registered MSMEs, 49,342 have closed, leading to the loss of 317,641 jobs. These job losses are from a total MSME workforce of 181.6 million registered on the Udyam registration portal since its inception on July 1, 2020.
""Of these, 0.17% or 49,342 enterprises with employment of 317,641 de-registered or showed closure on the portal during the last ten years,” Majhi said.
According to the Ministry of Labour and Employment, the estimated unemployment rate for people aged 15 years and above was 4.2% in 2020-21, 4.1% in 2021-22, and 3.2% in 2022-23.
In addition to Maharashtra, Tamil Nadu saw 6,298 closures resulting in 43,324 job losses, Uttar Pradesh had 3,425 closures with 33,230 job losses, Gujarat experienced 4,861 closures causing 22,345 job losses, and Bihar faced 2,414 closures with 15,317 job losses. Madhya Pradesh witnessed 1,653 MSME closures, leading to the loss of 11,727 jobs. Delhi saw 947 closures with 8,210 job losses, West Bengal had 1,548 closures affecting 8,856 jobs, and Kerala experienced 1,336 closures resulting in 12,672 job losses.
“The closures are attributed to various reasons including changes in company ownership, redundant certificates, and duplicate registrations,” Majhi explained.
In her recent budget speech, Finance Minister Nirmala Sitharaman announced several measures to support the MSME sector. These include a credit guarantee scheme for machinery loans without collateral, a self-financing guarantee fund offering up to Rs 1 billion per borrower, and a new assessment model for MSME credit by public sector banks based on digital footprints.
Additionally, the budget proposed enhanced credit support during stress periods to prevent MSMEs from becoming NPAs, raised the Mudra loan limit to Rs 2 million, and plans to open 24 new SIDBI branches in MSME clusters within three years. E-commerce export hubs will also be established in a PPP mode to help MSMEs and traditional artisans access international markets with a seamless regulatory framework.
MSMEs contribute about 45% to India's total exports, yet there is significant potential for growth in this area. A report by NITI Aayog and the Foundation for Economic Development noted that only 0.95% of MSMEs are engaged in exports. Despite the potential, India's e-commerce exports are significantly lower than those of comparable economies like China.
MSMEs contribute about 27% to India's GDP and employ more than 110 million people, making them the second-largest employer in the country after agriculture
(Source: Mint)
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