ROLE OF SME IN THE ECONOMIC DEVELOPMENT OF INDIA

PREPARED BY:SHAIVALINI SHARMA BPIBS,MBA( IIIRD SEMESTER) 02911403911.

Some facts about SMEs

SSI sector accounts for around 95% of the industrial units in our country. 40% of manufacturing output in our country comes from SSI. One third of our nations exports are from SSI.

Are these SMEs really important for the economic Development of India?????

YES. SMEs play a vital role in the

economic development of our country.

The question is

HOW ??

In order to answer that let us take a look at the BENEFITS the small scale industries offer to the economy.

SOCIAL AND ECONOMIC BENEFITS OF SMALL SCALE ENTERPRISES.

Development of indigenous enterprise and skills. Creation of employment opportunities/ Labour absorption. Increases the supply of manufacture goods.
Reduction in regional imbalances/ rural development/ balanced economic growth.

Poverty eradication. Promotion of entrepreneurship. Helps in countrys industrial development.

Promotion of capital formation.

SMALL SCALE INDUSTRY IN INDIA.

India has been focusing on developing the Small scale industries. Primary objective of developing SSI in our country, particularly rural areas is:To generate better employment opportunities in the country. Raise income and standard of living. Developing a more balanced and integrated economy.

Whats In Favour For Development Of Small Scale Industries???

There is a scarcity of huge amount of capital required for establishment and promotion of large scale industries.

Availability of surplus labour.

Reduction in cost of transportation by setting units throughout the country.

Widely spread units throughout the country will help remove haulage of raw materials or finished products which is quite common in centralized industries. Utilizing the untapped resources of the region like the local raw material and the skills of the local people.

HOW THE SSI HELPS IN THE ECONOMIC DEVELOPMENT??

Establishment of SSI in rural and backward areas

Decentralizatio n of industry and creation of industrial estates

Increased level of Employment

Balanced Regional Development

ECONOMIC GROWTH

Increased Standard of Living

PROGRAMME FOR DEVELOPMENT OF SSI

In 1956 Industrial Policy Resolution put forth arguments in favour of small- scale industrial units:

EMPLOYMENT ARGUMENT EQUALITY ARGUMENT LATENT RESOURCE ARGUMENT DECENTRALIZATION ARGUMENT

EMPLOYMENT ARGUMENT

Small scale industries are labour intensive These industries helps in creation of vast employment opportunities. It is very useful for a labour surplus economy like India suffering from acute problems of unemployment, underemployment and seasonal unemployment. Also these industries are either proprietary or partnership concerns where employer employee relationships are harmonious. This helps in maintenance of Industrial peace.

EQUALITY ARGUMENT

Income generated in a large number of small enterprises is dispersed more widely in community than income generated in a few large enterprises. Thus, the income benefit of small enterprises is derived by large segment of population. Whereas large enterprises encourages monopoly and concentration of economic power. In this way the small enterprises helps in equal distribution of income.

LATENT RESOURCE ARGUMENT

Small enterprises are able to tap latent resources like entrepreneurial ability, hoarded wealth etc.

In order to make the best use of entrepreneurial ability there is a need to speed up the process of activating the factors of production leading to a higher rate of economic growth.

DECENTRALIZATION ARGUMENT

Location of large enterprises is conditioned by inflexible environmental factors. Whereas locational requirements of small scale enterprises is often flexible. Decentralization also helps in tapping local resources such as raw material, local talents etc.

CONCLUSION

Small Scale enterprises play a very important role in the economic development of a country. These help in achieving various socio economic objectives like development of indigenous enterprises and skills, increased supply of manufactured goods, creation of employment opportunities, decentralization of manufacturing activity and reduction in regional imbalances. Also it helps the entrepreneurs to become more self reliant and take initiative and economic independence as they learn to acquire knowledge

In India, the Government has taken a keen interest in the development of the small scale enterprises. The government, renders two king of assistance to them; financial and nonfinancial. The government assist the small scale industries to:a. Improve their techniques of production and management, b. Provide credit facilities both for investment and for working capital, c. Provide common service facilities.

THANK YOU.