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Chapter: 11th Commerce : Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs)

Role and Significance of MSMEs

MSMEs generate more employment opportunities than large business concerns.

Role and Significance of MSMEs

 

Employment Potential

MSMEs generate more employment opportunities than large business concerns. They are mostly labour intensive, thus they provide more employment opportunities to a larger number of people in India.

 

Low Production Cost

MSMEs do not require  skilled  labourers or professionals to run the organisation. It employs cheap labour and thus minimizes the overhead. These units are more cost efficient thanlarge scale units, thus facilitates production of goods at low cost.

 

Low Investment

MSMEs do  not  require  a  huge  capital  to start the unit. It can employ locally available resources within the reach of the owner. They help to perfect and promote traditional family skills and handicrafts. These industries facilitate the growth of local entrepreneurs and self employed professionals in small towns and villages.

 

Quick Decision Making

MSMEs need not hire professional managers to run the management on a day to day basis. In most cases, owner himself manages the enterprises. Hence, timely decision making becomes easy and effective.

 

Supplementary Role

MSMEs play a complementary role to serve as a feeder to large scale industries. They supply accessories, spare parts and components to large scale industries.

 

Establishment of Socialistic Pattern of Society

MSME sector contributes towards the establishment of socialistic pattern of society by reducing the concentration of income and wealth. It enables and empowers people of small means to take up a gainful industrial activity, and thereby helps to achieve equitable distribution of wealth.

 

Balanced Regional Development

By encouraging MSMEs in industrially backward areas of India, balanced development can be achieved across all regions. It will also help greatly in preventing the people from migrating to cities and towns in pursuit of employment.

 

Promotion of Self Employment and Self Reliance Spirit

MSMEs help to a great deal in developing a class of entrepreneurs. It promotes self employment and a spirit  of  self  reliance in the society, thereby contributing an increase in per capita income or economic development.

 

Higher Contribution to Manufacturing and Export

MSMEs contribute 45% to the total manufacturing output and 40% to the exports from the country. It helps in earning precious foreign exchange in various countries across the world.




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11th Commerce : Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs) : Role and Significance of MSMEs |


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