The Critical Role of Micro, Small & Medium Enterprises in Employment Generation: An Indian Experience

  •  N. Rajeevan    
  •  M. M. Sulphey    
  •  S. Rajasekar    


The purpose of this study is to examine the role of Micro, Small and Medium Enterprises (MSMEs) in Indian economy towards employment generation. It is found that this sector provides employment to nearly 60 million people through 26 million enterprises. In terms of employment generation, place of MSMEs is next to agriculture. Second All India census of Small Scale Industries (Financial Year 1987-88) had recorded 121.74 per cent growth in employment in this sector. Though the Third All India census of Small Scale Industries (Financial Year 2001-02) showed a decline in the growth of employment, this sector has achieved better growth in the fourth census (Financial Year 2006-07) as a reflection of the structural reforms implemented in the Indian economy. This study also reveals that the unregistered enterprises generate more than 80 per cent of the employments. By computing the Compound Annual Growth Rate (CAGR) in the MSMEs sector of India, it has seen that CAGR for the growth of employment in the post reform period is higher than the pre reform period. Even after the integration of Indian economy with global economy in 1991, MSMEs sector of India has performed well in employment generation.


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