Paper: GS – III, Subject: Economy, Topic: Industry and Industrial policies, Issue: Scenario of MSMEs in India.
Context:
MSMEs are a crucial part of India’s economy contribute to 30% of GDP, 40% of exports and employ millions of people. Despite their importance, MSME’s suffer from incomplete and distorted statistical data, particularly for unincorporated MSMEs.
Key Highlights:
Data Sources on MSMEs:
- Annual Survey of Unincorporated Sector Enterprises (ASUSE): Conducted by NSSO; covers non-agricultural, non-construction, unincorporated enterprises.
- Administrative Databases: GST Network (GSTN) and Udyam registration data.
Gaps and Mismatches:
- ASUSE 2023–24: 77 million non-agricultural, non-construction unincorporated establishments with over 99% turnover below ₹1 crore but only 4% had Udyam registration.
- Udyam Dashboard: 66.5 million registered MSMEs with majority micro-enterprises.
- GST Data 2023–24: 17 million taxpayers with turnover below ₹1 crore.
- Large mismatch: ASUSE finds 12 million GST-registered establishments vs. 17 million in GST data.
- Exclusions: Coverage exclusions in ASUSE such as corporate, agriculture, construction etc explain part of the mismatch.
- Practical Challenges: If GST/Udyam not among top three registrations, respondents may not report them. ASUSE may fail to capture pace of digital formalization.
Causes of Data Distortion:
- Underestimation of Economic Contribution:
- GST/Udyam-registered enterprises often have higher turnover, more workers, more formal operations.
- Missing them from ASUSE data skews averages downward.
- Policy Misalignment: Digitalization schemes and skill upgrades may be under-targeted due to incomplete data.
- Uncounted Enterprises: Informal MSMEs may not participate in export-oriented supply chains, leading to misjudged sectoral contributions.
Measures:
- Integrate Databases: Combine GST, Udyam, EPFO, ESIC, and export promotion data.
- Expand ASUSE Coverage: Include commercial premises, not just household-based enterprises.
- Frequent up dations: Update Sampling Weights more frequently by collecting additional Indicators
- Digitisation: Encourage digital payment adoption, e-commerce activity, supply-chain linkages.
- Triangulate ASUSE Data: Cross-check with other sources for alignment with MSME Act.
- NSSO Transparency: Publish anonymized unit-level data for independent verification.
Conclusion:
Bridging the data gap between survey-based estimates and administrative records is essential to provide an accurate picture of MSMEs, guide targeted policy interventions, and unlock sectoral growth potential.
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