Along with the ongoing coronavirus pandemic, the memory of the economic crisis of 1990-91 has come back to haunt us. Only this time, the crisis is more prolonged, more uncertain and potentially more disastrous for the economy. Given the impending economic collapse, a systematic structural overhaul of the economy based on our civilisational thinking and swadeshi concepts, now re-invented in the form of Aatmanirbhar Bharat, is not only urgent but also expedient. But it can be implemented only through the six crore MSME business owners and service providers all over the country, both in the short term as well as in the long term.
First and foremost, to understand the role of MSMEs in and for implementing the aatmanirbhar policy, it is crucial to understand that every economic system that exists today is based on a set of underlying assumptions and beliefs about the way society is organised at the macro-level and individual persons carry out transactions at the micro-level. Therefore, “aatmanirbhar” in the context of India starts with self-sufficiency in the production of essential and locally consumed products and services by small-scale units and extends to exporting the surplus of those goods and services that our mass manufacturing businesses can make at the same quality or at lower cost to the rest of the world.
In fact, the history of political economy shows that it is the amalgam of the idea derived from the ancient texts and practices of the Indian civilisation, implemented over centuries by great kings and empires in India and around the world and visualised, advised and followed by great leaders and statesmen like Mahatma Gandhi and Pandit Deen Dayal Upadhyay after India attained political Independence from the British in 1947. And so, the real vision of an aatmanirbhar economy is that of a realistic, practical and self-sustaining economic system, and not merely an anachronistic economic belief, as mistakenly believed by the prevailing mainstream schools of economics (in the US and/ or Austria), or a Right-wing political slogan, as perennially misrepresented by conventional Marxian economists.
Now, in order to realise the true essence of aatmanirbhar, we must realise the basic difference between the stability and profitability of small- and medium-sized businesses. Consequently, balancing short-term and long-term MSME policy goals become critical. Data from the government’s website and the Annual Report of the MSME Ministry shows that a total of 6 crore MSMEs in India contribute 30% to the total GDP and almost 50% of total exports. They employ over 10 crore Indian workers and produce over 20 lakh crore goods and services. Therefore, while financing MSMEs through a Rs 3 lakh crore credit scheme is needed to keep them from being shut down in the coming days and months, in the longer run they must be made profitable to ensure their sustained contribution to GDP and employment. That of course, in a time of crisis like this, is easier said than done. It is therefore the right time for the government to set up a sovereign investment fund for the development of MSMEs under Chapter IV of the Micro, Small and Medium Enterprises Development (MSMED) Act and enter into private-public partnership between/with national and international investment funds. This will increase the availability of financial resources for MSMEs from the state and state-backed investment agencies as well as private and international investors, enabling them to participate in generating wealth for India and its stakeholders.
Another major reason why MSMEs are at the very core of the Aatmanirbhar Bharat policy is because of their ability to optimally utilise natural resources without disproportionate environmental damage. Since their growth is not injurious to the health of the natural ecosystem, MSMEs can scale in a sustainable manner. This obviously makes them justifiable and viable from a climate change point of view. Eventually, India’s commitment to the Paris Agreement can only be met by its ability to implement an MSME-led national development model which does not compromise or sacrifice the ecological balance of the entire planet.
Further, it is “aatmanirbhar” MSMEs which will be open to try, test and adopt new technology developed through open source platforms or crowdsourced solutions. The Report of the Expert Committee on Micro, Small and Medium Enterprises under the chairmanship of U.K. Sinha that was set up in January 2019 also recommended that the government built networks of development service providers to provide technology and technical solutions to MSMEs. The Aatmanirbhar Bharat app challenge launched this month is the first of several steps that the government must take in order to create a level-playing field for all MSMEs and make them competitive for the international market. It should be a simultaneous and coordinated effort by Indian tech startups and the MSME Export Promotion Council to identify, analyse and develop the latest technologies that exist and to customise them according to the requirements of the MSMEs and their customers.
Finally, implementing the “aatmanirbhar” MSME policy requires a stable Centre-state partnership and continuous coordination. For this the government must create a National Council for MSMEs at the apex level directly under the Prime Minister with the ministers for MSME, Commerce & Industry, Textiles, Food Processing, Agriculture, Rural Development, Railways and Surface Transport as members, with every state having a similar state council for MSMEs, as was recommended by the Expert Committee on MSMEs. The appointment of representatives or advisors from the three categories of enterprises — micro, small and medium — to these Councils would enable better reporting and feedback from the ground or operational level. This must become a process like kaizen for consistently enhancing the productivity and performance of MSMEs, thereby increasing their bottom line as well as their credit ratings.
All said and done, it is clear that the time for making in “aatmanirbhar” India and making India “aatmanirbhar” is here and now.
Aparna Raman is a lawyer, investment advisor, a qualified chartered accountant and former banker with an independent practice in economic laws and banking & financial regulations. She is based in Delhi and Chennai and is on Twitter @voxomnia.
