Budget boost for job creation, skill development in MSMEs

Micro, small, and medium enterprises (MSMEs) have a lot to cheer for, as the Union Budget 2016-17 has proposed several measures to support the sector. CRISIL believes the government's proposal to pay the Employee Pension Scheme contribution of 8.33 per cent for all new employees enrolling in the Employees' Provident Fund Organisation for the first three years of their employment is a big incentive for MSMEs.

Apart from recruiting unemployed people, MSMEs will be able to move contractual employees (who constituted almost 30 per cent of the workforce in over 7,000 CRISIL-rated MSMEs in the manufacturing sector) to their rolls and make them a part of the organised sector.

As per our assessment, 78 per cent of the promoters of these CRISIL-rated MSMEs are either graduates or under-graduates. So, significant investments in the 'Skill India' mission through the Pradhan Mantri Kaushal Vikas Yojana will help increase the availability of a skilled workforce in the MSME sector.

These initiatives should certainly help strengthen MSMEs and make them more competitive.

Note: This fortnightly tracker presents CRISIL's insights on MSMEs, a key element of the Indian economy. CRISIL has rated over 75,000 MSMEs so far.