2023 GS3 Answer

Q. Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

Question from UPSC Mains 2023 GS3 Paper

Model Answer: 

Manufacturing Sector and MSMEs in India

Manufacturing sector, especially Micro, Small and Medium Enterprises (MSMEs), plays a crucial role in the economic growth of a country. It contributes to the Gross Domestic Product (GDP), employment generation, and export promotion. In India, the government has been implementing various policies to promote the growth of the manufacturing sector and MSMEs. This essay aims to analyze the present policies of the Indian government in this regard.

1. Make in India Initiative:

Launched in 2014, the Make in India initiative aims to transform India into a global manufacturing hub. It focuses on 25 sectors including automobiles, textiles, construction, defense manufacturing, and more. The initiative has led to increased Foreign Direct Investment (FDI) in the manufacturing sector, and improved India’s ranking in the World Bank’s Ease of Doing Business Index.

2. MSME Development Policy:

The government has implemented the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, which provides a framework for the promotion, development, and enhancement of competitiveness of MSMEs. The Act also provides for a statutory consultative mechanism at the national level to ensure that the interests of these enterprises are taken into consideration while formulating policies.

3. Pradhan Mantri Mudra Yojana (PMMY):

The PMMY scheme was launched to provide loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises. This has helped many small-scale manufacturers to start or expand their businesses.

4. Atmanirbhar Bharat Abhiyan:

This initiative was launched in 2020 to make India self-reliant and reduce dependency on imports. It focuses on promoting local manufacturers and service providers, thereby strengthening the domestic market.

5. Credit Guarantee Scheme:

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched to make available collateral-free credit to the MSME sector. This has enabled many small and medium enterprises to access credit for their business operations.

6. Infrastructure Development:

The government has been investing heavily in infrastructure development, which indirectly supports the growth of the manufacturing sector. Good infrastructure facilitates the transport of goods, reduces the cost of production, and enhances competitiveness.

7. Skill India Mission:

The Skill India Mission aims to train over 40 crore people in different skills by 2022. This initiative will provide skilled labor to the manufacturing sector, thereby boosting its productivity and growth.

8. Ease of Doing Business:

The government has been implementing reforms to improve the business environment in the country. These include simplification of procedures, digitization of processes, and introduction of single-window clearance systems.

Conclusion:

The Indian government has made significant efforts to boost the manufacturing sector and MSMEs. However, challenges such as access to credit, lack of modern technology, and infrastructural bottlenecks still persist. Therefore, while the present policies have set the right direction, their effective implementation and addressing these challenges will be crucial for achieving faster economic growth.

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