The 12th five year plan witnesses fall in MSME investment in UP

Lucknow: Uttar Pradesh may have managed to exceed its target by setting up over 1,800 additional micro, small and medium enterprises (MSMEs) and generating over two lakh additional jobs during the 11th Five-Year Plan (2007-2012) but from 2012-13 onwards there has been a fall in investments in this sector in the state.

“The Uttar Pradesh (UP) government’s thrust upon development of MSMEs across the state has resulted in establishing over 1.66 lakh MSMEs with an investment of over Rs 13,000 crore and generating over 8.5 lakh employment opportunities during 2007-12 but from that period onwards the fall has been witnessed which may be attributed to macro-economic slowdown and a shift in focus from manufacturing to services sector which requires lower investment.

These findings have been reached in a just-concluded study jointly conducted by apex business body The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Thought Arbitrage Research Institute (TARI).

Releasing the study report, D.S. Rawat, secretary general, ASSOCHAM and Kaushik Dutta, director, TARI, on Thursady said that UP had made significant progress in promoting growth of MSMEs and had evidently been able to exceed targets set in the 11th Five-Year Plan to generate 6.5 lakh employment opportunities by establishing 1.65 MSME units across the state.

Implementation of Infrastructure and Industrial Investment Policy-2012 by the state government led to establishment of more than 45,000 MSME units with an investment of over Rs 3,000 crore, thereby providing employment to about five lakh people across UP in 2013-14, highlighted the study.

MSME sector accounts for almost 60 per cent of UP’s total industrial output, thereby playing a crucial role in providing large scale employment at lower capital cost, promoting industrialisation in rural and backward areas, reducing regional imbalance and assuring equitable distribution of national income and wealth. Besides, MSME sector is the second largest employment generator (after agriculture) in UP, as it employs over 92 lakh people across the state. However, 90 per cent of these people are employed in unregistered MSMEs.

ASSOCHAM also urged the state government to revive over 84,000 sick MSME units across UP as the sector forms the backbone of economic progress and development of UP which is India’s leading state with highest number of over 44 lakh enterprises in this sector, of which over 42 lakh units remain unregistered.

The study also pointed out the weak links of this sector in the state which inculde shortage of working capital, lack of technological support, internal structural issues, heavy interest burden, obsolete plant and machinery, resource crunch, dearth of manpower and certain key reasons of MSMEs in UP. the study suggested the state government should involve industry players, academic institutes, field experts and others to assist sick MSMEs in reviving their businesses which would also lead to utilisation of the assets and capacity already created.