Contribution of MSMEs with Reference to Entrepreneurship Development and Employment Generation in North-East India: A Critical Evaluation

Abstract

Micro Small and Medium enterprises (MSME) has been playing an important role in the development of Indian economy. On the one hand, it creates entrepreneurial awareness among the youth and motivates them to establish MSME unit by giving proper training. On the other hand, it provides gainful employment to a large section of population and makes significant contribution to GDP of the country. This paper critically examines the contribution made by MSME with respect to Entrepreneurship development and employment generation in eight states of North-East India (NEI). The new North-East Industrial and Investment Promotion Policy have been introduced in 2007 with the aim of consolidating and developing this sector in NEI. So, we use the period 2006–07 to 2012–13 as the reference period of the study. First we use Panel data regression model to study the contribution of this sector in North East Region. Our main finding is that MSME sector has made significant contribution in development of entrepreneurship among the youth population of North Eastern states of India. Some states show more success due to their specific state policies like financial subsidy, SEZ etc. Next we focus on employment generation capacity of MSME sector. We derive employment elasticity of output to find out the employment generation capacity of this sector. We find that MSME sector has been able to create employment opportunity within the sector but it fails to absorb the semi-skilled and unskilled migrated labour forces from agriculture and other sector in all eight states of NEI. The study suggests that the government should take measures to create environment which is conducive to smooth operation of the MSME units in NEI so that it will 300create employment opportunity among youth population of this region.