A dawn of hope for MSMEs
The Story of Indian MSMEs: Despair to Dawn of Hope is an impassionate account of the journey of the Micro, Small and Medium Enterprises (MSME) sector in India, narrated by a distinguished banker and economist, who has special interest in the sector. Dr B. Yerram Raju has been with State Bank of India and later with IDRBT and NIRD, and has decades of multisector experience, specifically in MSMEs and agriculture. In the book, he takes a distinct approach emphatically stating that people start enterprises and put their only dwelling house or other as collateral security, with the aim of earning profit and making a respectable living. He vividly narrates how MSMEs are defined both in India and other countries. One of his recommendations is to use the twin criteria of turnover and employment with specific thresholds for 2 reasons. First, the turnover definition enables several unorganized enterprises in the sector to come into the fold of organized. Second, it paves the way for increased direct and indirect employment opportunities.
However, MSMEs in the country are handicapped by a litany of problems - shortage of capital, redi take, bureaucracy, corruption and a lack of sympathy and understanding at the operational level. Most importantly, even while intentions are respected and promises are held out, there is no way these materializing. There is no way a small entrepreneur in distress getting any succor. While the governments at the center and the states for decades have announced a variety of policies and initiatives to promote the MSME sector, there are bottlenecks at the operationalization level and the entrepreneurs are left in the lurch.
Raju supplements his arguments with case studies that unfold best practices that MSMEs can follow and the failures from which they can learn lessons. The book offers practical solutions to many issues confronting the policy makers entrepreneurs and regulators.
Raju says in fact, post-liberalization, sincere efforts were initiated with the help of bureaucrats to mend the laws and this resulted in the single window system for approvals in Kerala and Andhra Pradesh. Subsequently efforts were made in Andhra Pradesh to establish an Industrial Area Local Authority (IALA), which functioned on a shared revenue basis, collected local taxes and shared a certain proportion with the municipal corporations. They also maintained the infrastructure in the industrial estates. This gamut of operations let to the clean-up of the industrial corridors in former Andhra Pradesh.
The book has given more emphasis on the manufacturing micro and small enterprises and not the whole segment of MSMEs, especially their access to finance and their drivers. It also discusses the policy initiatives of both the central and state government and gives anecdotes of a few small entrepreneurs viewing failure as a stepping-stone to success. In the lifecycle of an enterprise, development and death co-exist at different times, he says, maintaining that the development process involves struggle, walking on rugged roads, and unwelcoming infrastructure in some cases.
In the foreword, D. Subbarao, former governor of the Reserve Bank of India, says Raju brings to the book decades of ‘frontier’ experience in his diverse roles as banker, consultant and mentor. “The book reflects that rick experience and expertise,” he adds.
Former governor of the Reserve Bank of India describes the book as a distilled account of personal and professional experience of the author lasting over several decades on the complex issue of credit to micro and small enterprises. “It is a remarkable account of case studies also, giving deep insights into the practical problems and solutions. A valuable addition to the literature on the subject!,” adds Dr Reddy.
The book attempts a comprehensive review of the problems and prospects of MSME sector in India and presents an objective analysis of its strengths and weaknesses, opines B.P. Acharya, special chief secretary government of Telangana, adding: “The author painstakingly takes us through the virtual minefield that an entrepreneur has to survive to stay afloat. Especially insightful are his observations on the role the Financial Institutions have to play in this process. All in all, a notable addition to the literature on the subject.”
Former deputy managing director of State Bank of India Amitabha Guha also describes the book as having comprehensively covered the strategic need of the sector and the unrealized potentials it offers. Says he: “The author’s mastery over the subject is a product of his formidable engagement with the policy and its implementation. This book would very well serve those who are in policy formulation, research and academics.
Raju has published 3 books and over 100 articles on the MSME sector and he says if this book especially serves as a wake-up call to some entrepreneurs, and a guide to the future of policy pursuits in this sector, it would achieve its purpose.