MSME businesses are being adopted at an accelerated pace right now.
It is of extreme importance for a country like India to have it MSME
environment sound and well developed. Many of the traditional
businesses are slowly finding their way into the MSME ecosystem and
as a result of which the competition is growing day by the day and
more quality output is being delivered. It has become one of the
foremost aspects of this space to help grow more businesses. It is
extremely valuable to know what roles MSMEs play in the face of a
global economic crisis.
The impact of the Covid pandemic was extremely severe on the
livelihoods of people belonging to different strata of the world. The
MSMEs developed many different tactics during this period in order
to survive and thrive. Many of them were successful in their attempt
in doing so. This led to the entry of more businesses into the MSME
sector as a whole.
The SMEs are becoming more and more present in the global
economies. They play a significant role in national economy by
providing various goods and services, creating job opportunities,
developing regional economies and communities, helping the
competition in the market and offering innovation. Main areas of
their presence are manufacturing industry, distribution industry
and services industry.
In the manufacturing industry they produce goods by using skills
developed historically and accumulated by individuals Produce
products whose row materials and goods are limited in terms
transferable time (foods, etc.) Operate fields in which are many
processing and manufacturing methods and whose economic efficiency
can be enhanced by specializing them in the areas of expertise (parts
and supporting industry for autos, home electric appliances) Produce
product whose market size is too small for big companies to enter
Operate in markets where innovative entrepreneurs take risks,
commercialize new technologies and develop new business.
In Distribution Industry they operate in order to distribute a variety of
goods efficiently from the manufacturers to consumers and for the
reason and need that the existence of many SMEs having businesses
tie-ups is essential. In the Services Industry they operate in the
presence of many services provided both to businesses and individuals
where due to constrain of time and distance, a large number of SMEs
are needed to provide them.
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MSMEs play a major role in the economic recovery of a country. The
sole reason of this is the involvement of local people within this sector
is always high. Majority of the MSME in India belong mostly to the rural
areas and the semi developed areas. This leads to more household
participation in the MSME businesses. The Ministry of MSME has
arranged for many skill development programs for the people to get
themselves educated and get going for job roles within the MSME
sector.
Majority of the contribution to the GDP and the exports in India are
dependent on the performance of the MSME businesses. Due to this
severe dependency many businesses are developing their operations
within this sector to contribute for the overall growth and evolution.
The Government of India has been very keen on proactively helping
the MSMEs to market themselves by providing MSME benefits for them.
It is an interesting time for MSMEs to operate as the global financial
condition is skewed more towards a recession. At such times, there is a
serious lack of growth within the economy and it is time for the MSMEs
to shine. Majority of the MSMEs are involved in businesses where there
is a genuine demand for the products that are used in day to day like
for example MSMEs belonging to the FMCG and pharmaceutical sector
are in heavy demand during and post any form of crisis.
Do watch: https://www.youtube.com/shorts/mxmhEv0xPgM
The 2008 global financial and economic crisis caused a lot of havoc in
the world economy due to the sub prime mortgage crisis in the US
creating a financial armageddon and its ripple effect was felt in farthest
parts of the world. After that severe economic incident, the Central banks
started to do a lot of quantitative easing to balance the flow of liquidity
within the economy and as a result all the majority of the risk assets
skyrocketed taking the major global indices to all time highs.
The Covid pandemic suddenly changed the game and the central banks
were again forced to interfere within the normal flow of the monetary
system and decided to take special measures to stop the economy from
getting completely broken. This was a primary driver for the majority of
high inflation that the economies of the world had to face in the last
couple of years. As the economy is slowly progressing and healing with
the passage of time, it is important for the MSME to ramp up their
efforts and go hand in hand along with the changing trends of the
economy.
MSMEs play a big role in the vitalization and development of national
economies because they are creating job opportunities, promotes
stability and development of regional economies, produces much of the
creativity and innovation that fuels economic progress, promote the
competition and cooperation and produce high value added products.
Large number of people relies on the small and medium enterprises
directly or indirectly. They play a big role with their contribution in
labor absorption, poverty alleviation and revenue generation. The
critical importance of this sector warrants much more attention by all
the stakeholders which includes government agencies, academia and
multinational companies because of their vested interest.
After the global economic crisis things have changed for good and bad
both. The global economic crisis impact on small business was not that
severe as proper risk management was adhered to by majority of the
key players. There were a lot of financial and marketing problems of
SMEs that were dealt with later on the MSMEs. It is thus time to pay
attention to new areas in which the MSME ecosystem is bringing more
value.