Opinion: Strong ecosystem for MSEs in Telangana
CMIE in its March update indicates that Telangana has 4.1% unemployment while AP recorded 7.7% unemployment. India’s unemployment rate is around 7.45%
By B Yerram Raju
Over the last nine years, Telangana has become the most preferred investment destination for high-tech manufacturing in India. The State has ensured that ‘Made in Telangana’ is now a tagline that is being seen and used by people across the globe. As of March 2023, official figures show that investments during 2022-23 shot up to a staggering Rs 49,579.18 crore.
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It is easy to get a good estimate of employment from the corporate manufacturing sector and the medium enterprise sector as they are verifiable from the CMIE database and Director General of Employment, Ministry of Labour. But it is not so easy in the case of manufacturing micro and small enterprises (MSEs).
Manufacturing MSEs
Most MSEs are expected to maintain muster roll. Once they maintain muster roll, they have to pay the Employees’ State Insurance monthly. At least 85% of enterprises find it cost-effective to engage contract labour who are mostly migratory in character. Such migratory labour is found cheaper to engage than the local ones, despite giving them rented accommodation and festival leave fare concessions, and they are also reported to produce higher output. It is here that the labour intensity of the manufacturing MSEs is shrouded in mystery.
It will, however, be interesting to view the progress of the State regarding employment from the data on TS-iPass approvals and Udyam registrations. The catch in Udyam registrations is that the existing units also enrol and not just the new enterprises. The national level data that comes from the Bureau of Labour Statistics gives us the clue and it is worth comparing Telangana with the national statistics on labour at one end with those of some other progressive industrial states.
The latest Periodical Labour Force Survey holds testimony to the increase in manufacturing employment by about 5% in 2021 and about 8% in 2021-22. Several field studies revealed severe job losses during the Covid-19 period, particularly among the manufacturing MSEs. Viewed against the backdrop of three million job losses in manufacturing between 2011 and 2018, creation of 6 million jobs during the post-covid period 2021-22 is remarkable.
Unemployment Rates
It is also pertinent to look at the unemployment rates among the States and see where Telangana stands. Telangana at the time of formation in 2014 had the notoriety of having Mahabubnagar and Palamuru districts as the icons of outbound seasonal migration in India. Now, these two districts no longer figure on the list.
The Centre for Monitoring Indian Economy (CMIE), a private organisation, in its 1 March 2023 update, estimates India’s unemployment rate in India is around 7.45% at present. It is 7.93% in urban India whereas only 7.44% in rural India. State-wise unemployment data released by the CMIE indicates that Telangana has 4.1% unemployment similar to Tamil Nadu, another progressive industrial State, while Andhra Pradesh recorded 7.7% unemployment.
Telangana’s strong industrial ecosystem, particularly, the manufacturing MSEs that front-end the supply chains, has supportive institutions like the T-Hub for startups, We-Hub for women entrepreneur startups, T-Works for the manufacturing startups, Research, and Innovation Centre of Hyderabad (RICH) and Telangana Industrial Health Clinic Ltd (TIHCL), the only institution of its kind focusing on the revival of micro and small manufacturing in addition to lending directly to such manufacturing enterprises and clusters. All these institutions work on the principles of autonomy, accountability and transparency. There is no interference by the State government in their daily functioning. At the same time, they work in close coordination with the government and execute the policies at the required speed and to the satisfaction of the industrialists it attracts.
De-stressing Enterprise
It is the foresight and vision of the government in the very first few years of its creation that led to the setting up of Telangana Industrial Health Clinic Ltd, targeting the revival and restructuring of micro and small manufacturing enterprises as one of its principal objectives. To this extent, it prevented the closure of viable manufacturing micro and small enterprises both through strategic and financial support to bring them back to health, thereby helping in sustaining employment in those enterprises.
This institution removed the stress of 612 enterprises during the last two years, and these were considered potentially viable by the SLBC during this period. The details for the last quarter ending March 2023 indicate 7,309 enterprises were under stress while barely 6 enterprises were resolved with an outlay of Rs 3.56 crore. The data includes both manufacturing and services.
Social impact measured in terms of employment sustainability involves around 4,700 persons approximately while machinery worth around Rs 195 crore has been restored to near full capacity measured in terms of an average of six persons and Rs 25 lakh machinery value per enterprise.
Telangana with its advanced information technology infrastructure for startups is a strong candidate for manufacturing micro and small enterprises with its focused 12 MSME Parks. Handloom and power loom clusters and apparel, gems and jewellery, artisan clusters, woodcraft, precision tools, auto components, particularly for electric vehicles, plastics, packaging of various varieties, toys, artefacts, etc, have immense potential in the next two years.
Large manufacturing enterprises that have already set shop in the State offer immense potential for progressive micro and small enterprises. Training, consulting and advisory services, human resource, digitalisation and handholding at an affordable cost as cohorts of the TIHCL can ensure delivery of quality and timeliness in delivering their output. Golden Telangana with multi-sector excellence and grossly reduced inequalities is thus a delivered promise of Chief Minister K Chandrashekhar Rao.
