Livelihood and Microenterprises in India

Table of Contents

Introduction

Definitions of Micro, Small & Medium Enterprises

Manufacturing sector

Problems faced by the entrepreneurs

Reasons for problems faced by the micro-entrepreneurs and the government policies adopted for its eradication, in a brief

Alternatives proposed to counter the problem

Plan 1

Plan 2

Reference List

Introduction

The project at large will be dealing with the aspiration of the youth, the people who intend to build their startup and grow like the successful entrepreneurs.

The term “entrepreneurship” comes from the French verb “entreprendre” and the German word “unternehmen”, both means to “undertake”. Bygrave and Hofer in 1891 defined the entrepreneurial process as involving all the functions, activities, and actions associated with perceiving of opportunities and creation of organizations to pursue them. In simple, entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods".^[1]

This paper draws together arguments, conclusions and insights generated by research to develop and test practical tools that could help development practitioners use sustainable livelihoods approaches in the particular context of enterprise development^[2]. The constraint of finance seems to be the primary reason, though there are several other constraints which seem to have been hidden by the seasoned politicians. The act of not reimbursing the small-scale industries sectors has demoralized the novice and the adept entrepreneurs in executing their plan.

Definitions of Micro, Small & Medium Enterprises

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

(i) Manufacturing Enterprises - The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use.^[3]

(ii) Service Enterprises - The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.^[4]

Manufacturing sector

Enterprises Investment in plant & Machinery

Micro Does not exceed twenty five lakh rupees

Small More than twenty five lakh rupees but does not exceed five crore rupees

Medium More than five crore rupees but does not exceed ten crore rupees

Service sector

Enterprises Investment in equipment

Micro Enterprises Does not exceed ten lakh rupees.

Small Enterprises More than ten lakh rupees but does not exceed two crore rupees.

Medium Enterprises More than two crore rupees but does not exceed five core rupees.^[5]

The definition of the micro-entrepreneurs should be in consonance to the internationally accepted definition. The globally accepted definition considers this as self-sustainable but the present trend has an ulterior motive like competition and leading a luxurious life. The definition should not be restricted to only monetary involvement; several other factors should be taken into consideration.^[6] The factors like involvement of employments and quality of machinery used. The maximum turnover that has yielded out of it should be taken into consideration in defining micro-entrepreneurship .The recent amendment in restricting the expenditure on the machinery used seems to demean the very objective of the ministry of the MSMED. The expenditure should be restricted according to the work involved, not to universal for all micro-enterprise. A micro-enterprise might grow to a macro-enterprise depending upon customer satisfaction. Rules should not be universal but should be specific. The definition of the word ‘Micro-enterprise’ should be interpreted without any ambiguity.

The micro-entrepreneurs have certain ambition and objectives, which are quite specific and only like-minded people, can understand. The Government at center can beat around the bush, and remain unperturbed by the growing problems, which is a hot potato, now days. The policy coming like a bolt from the blue, showing a glimpse of hope to the entrepreneurs whom they actual has failed to identify. Firstly, there should be change in strategy and in approach if you are not able to connect the dots.

This project analyses the every problem from the inception, first identifying the aspiration of the young micro-entrepreneurs. The several approaches to deal with the aspiration of the young entrepreneurs will be discussed at large in the later part in this article. The author has also critically analyzed the present policies taken by Government in eradicating the problems faced by the Micro-entrepreneurs.

THE NEW INDUSTRIAL POLICY – 1999

The main objective of the Industrial Policy, 1999 was to create congenial environment for the small industrial units to cope with the emerging challenges of globalization. To focus fully on the promotion and development of small industrial units, a separate Ministry of Small Industrial Units and Agro and Rural Industries was created.^[7]

Problems faced by the entrepreneurs

There are several problems which an entrepreneur can come across. Several economist and eminent people have cited the access to credit as the prime problem. The main or the prime reason of the problem of micro-entrepreneurs is the government not being able to live up to their aspiration. This is where the problem arises. The government is making a mistake at the first sight only, which cannot be afforded, because it turns out huge. There should be a body of represented people whom the people especially the entrepreneurs are easily approachable and can share their ideas and views. This will allow direct interaction with the entrepreneurs and know the aspiration or their objective. The problems can be categorized as:

1. Issue of Raw Material:^[8].

A noteworthy issue that the smaller scale and little undertakings need to fight with is the obtainment of crude material. The issue of crude material has accepted the state of:

(i) An outright lack,
(ii) A low quality of crude materials, and
(iii) A high cost.

At that point, there was no extreme issue in getting the required crude materials. In any case, since the time that the development of modem little scale commercial ventures fabricating a considerable measure of modern things, the issue of crude material has raised as a significant issue on their creation endeavors.^[9]

The little units that utilization imported crude material face crude material issue with more seriousness for the most part because of trouble in acquiring this crude material either by virtue of the remote trade emergency or some of different reasons.

Indeed, even the smaller scale and little undertakings that rely on upon nearby assets for crude material prerequisites confront the issue of other sort. A case of this sort is handloom industry that depends for its necessity of cotton on neighborhood brokers.^[10]

`These brokers frequently supply their cotton to the weavers on the conditions that they would offer their prepared garments to these dealers just. At that point, what happens that the dealers offer cotton to them at genuinely high costs. This turns into a clearest case of how poor people weavers are subjected to twofold abuse on account of dealers.

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^[1] Dr.N. Santhi and S. Rajesh Kumar, Entrepreneurship Challenges and Opportunities in India, ‘ Bonfring International Journal of Industrial Engineering and Management Science ’, Vol 1 Special issue, December 2011

^[2] Mike Albu and Andrew Scott, Understanding livelihoods that involve micro-enterprise: markets and technological capabilities in the SL framework, ‘ Intermediate Technology Development Group (ITDG) ’, 2001

^[3] Srinivas K.T, Role of Micro, Small and Medium Enterprises in Inclusive Growth, ‘ International Journal of Engineering and Management Research ’,3 : 4, August 2013

^[4] http://www.dcmsme.gov.in/ssiindia/defination_msme.html, last seen 21 : 03, 21/2/2016

^[5] http://msme.gov.in/Chapter%203-Eng_200708.pdf, last seen 20 : 34, 21/2/2016

^[6] Nalla bala kalyan kumar; DR.Sardar gugloth, MICRO, SMALL AND MEDIUM ENTERPRISES IN THE 21st CENTURY, ‘ ZENITH International Journal of Business Economics & Management Research ’, 2:5, May 2012

^[7] Nalla bala kalyan kumar; DR.Sardar gugloth, MICRO, SMALL AND MEDIUM ENTERPRISES IN THE 21st CENTURY, ‘ ZENITH International Journal of Business Economics & Management Research ’, 2:5, May 2012

^[8] Mike Albu and Andrew Scott, Understanding livelihoods that involve micro-enterprise: markets and technological capabilities in the SL framework, ‘ Intermediate Technology Development Group (ITDG) ’, 2001

^[9] N. Aruna, ‘Problems Faced By Micro, Small and Medium Enterprises – A Special Reference to Small Entrepreneurs in Visakhapatnam’, IOSR Journal of Business and Management (IOSR-JBM),Volume 17, Issue 4, 2015, page 3

^[10] Nancy M. Carter, Colette Henry, Barra O. Cinneide & Kate Johnston (eds), Female Entrepreneurship: Implications for Education, Training and Policy ,