Hyderabad: India’s GDP growth numbers are witnessing a constant decline. The country’s real GDP growth in 2019-20 fiscal is expected to be below 5 per cent as the impact of stimulus measures of the Central government will take time to benefit the economy.
The GDP figures for the second quarter of the fiscal shows a moderation in the pace of economic growth to 4.5 per cent, the weakest in six years, primarily due to a slump in manufacturing output and consumption levels across sectors. Experts point out that while it is essential to take steps to boost consumer spending, focus on MSME growth will help create jobs and strengthen the economy.
One of the most affected sectors is the automotive sector. A latest report by Automotive Component Manufacturers Association (ACMA) shows that the auto component industry’s turnover witnessed worst ever decline resulting in a job loss of around 1 lakh temporary workers till July this year, besides an investment loss of up to $2 billion.
Highlighting the core issues, Crux Management Services president Dr Vikas Singh told Telangana Today, “We are disproportionally spending more resources and efforts on the big businesses than on the small and medium enterprises, which are the job creators. Removing obstacles to businesses can be a positive force for fostering economic growth. Business is mostly small in India. The policymakers need to recognise that the small and medium entrepreneurs are the driving forces of the economy and focal to employment creation.”
He added, “The ability of the government to create jobs is limited; the big industries haven’t and can’t solve India’s job problems. A crore invested by a large company creates no more than 10 jobs while MSMEs create around 250 jobs.”
A Crux study indicates that economic growth has been held back by burdensome regulation, poor policy and improper implementation. Labour laws, land reforms are two of several issues.
Similarly, the inspector raj, scrutiny and intense monitoring choke off the growth of firms in India.
He questions, “How is it possible for the MSME sector to grow when the government and the government-owned institutions still owe over Rs 3 lakh crores to the MSMEs and delay payment beyond 60 days on average. Why is it that we have 75 per cent of our businesses with less than 10 people, making them easy meat in the global competitive market where the economies of scale is a key driver?”
Singh adds that it is time to revamp and develop relevant pragmatic and sustainable schemes for the small and medium businesses.
The government must immediately focus and bring in a more appropriate, and effective policy to create and strengthen the entrepreneurial enhancing ecosystem. Though India’s ranking has improved in the ease of doing business, leapfrogging 14 places to take the 63rd spot, there is a lot that needs to be done, he pointed out.
The government has done well and brought bold reforms such as the ease of starting businesses, cutting corporate tax rate, faster bankruptcy resolution & issuance of construction permits, making trading across borders easier by integrating stakeholders in a single electronic platform, enabling post clearance audits, upgrading port infrastructure, and enhancing the electronic submission of documents.
Now, efforts are needed to cater to the needs of each industry that is struggling with the economic slowdown. A tailored approach is necessary to attract investments, retain jobs and create fresh employment.