MSME — The Solution to India’s Job Crisis

According to government data, the unemployment rate in India reached a 45-year high of 6.1 percent in 2018–19. Amid all this chaos, the MSME sector has proved to be the winner. Despite suffering from problems related to cash crunch due to policies such as demonetization and GST, it has performed better than all other sectors. The Confederation of Indian Industry survey of over one lakh small and medium enterprises has shown a 13.9% increase in net jobs created in the MSME sector in the last four years or 3.3% per annum.

Some estimates from CII and KPMG shows that the MSME sector contributes only 8% to the GDP while this number is above 50% for countries like South Africa, Italy, and Germany.

In terms of employment generated by the sector, India scores better compared to GDP but again lags behind countries such as Italy, South Africa, Singapore, and Canada, where the contribution is above 70% while for India, it’s just 21%.

Gadkari, Minister for Micro, small and medium enterprises, expect MSMEs to contribute to 50% of the labor force.

This could only be possible if the support system for the MSMEs improves.The government is trying to help MSMEs by providing regulatory support, easy funding options, better infrastructure, and skill enhancement. Recently, Gadkari proposed an e-commerce site for MSMEs, which is a commendable step.

All of this is necessary, but the question is, are we making a fundamental mistake? Most of the research and surveys do not highlight, but the major problem with the MSMEs is the lack of digitization. If small business owners are not digitally empowered then it does not make any sense to build something like an e-commerce platform because they will not adopt any solution which requires digital knowledge.

The solution to this is taking one step at a time and teach them how to leverage data to improve their business.

One problem that PagarBook figured out was the lack of any promising Human Resource Management platform. They struggle a lot with keeping the records of their employees. It takes a lot of time and effort for them to maintain all their employee-related records using pen and paper. Most of the HRM solutions are suitable for tech-savvy people, but what they require is a product that is as simple to use as WhatsApp. They have their problems, and they do not want to waste their time learning to use complex HR solutions. Affordability makes it even more difficult to use these solutions.

PagarBook promises to provide a solution to these MSMEs using their simple to use application. Using, PagarBook a business owner can maintain all the records of their employees digitally and can get insights around the same. PagarBook could be the first step in the digital education of the MSMEs who have been struggling until now to use any form of the digital tool.

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