Traders, MSMEs saw 3.5 mn job losses due to note ban, GST, other factors

Among various solutions, AIMO pushed for the supply of raw materials such as steel and aluminium to MSMEs at a lower subsidised cost

The TMSME (Traders, micro, small and medium enterprises) sector has seen a loss of around 3.5 million jobs in the past 4.5 years, according to a survey conducted by the All India Manufacturers Organisation (AIMO). Demonetisation and the goods and services tax (GST) are the main reasons, besides other factors such as e-commerce, according to AIMO. 

The TMSME sector has been hit hard, with a job loss of 43 per cent in the trader segment, 32 per cent in the micro segment, 35 per cent in the small businesses segment, and 24 per cent loss in the medium businesses segment. 

The survey also stated that most of the popular government schemes such as Make In India, Digital India, Skill India and Startup India have not been of much use for traders and micro and small industries, while medium-scale industries feel happier with Digital India initiatives. Those who participated in the survey, however, credited the present government for being free of corruption, having transparency and pushing online transactions. 

The survey was conducted by AIMO through over 34,000 TMSME representatives across India.

The worst hit to the segment was the elimination of self-employed categories such as tailors, cobblers, barbers, plumbers, masons and electricians, etc. Traders are closing down due to stiff competition from e-commerce sales and this will also result in a loss of revenue in rental income by middle-income families.

The worst-hit sectors where unorganised employment prevails were plastic, matches, crackers, dyeing units, stitching units, stone units, tanneries, job working units, and printing sectors, said the report.

"The year 2015–16 saw a growth in all areas of business due to high sentiments and expectations from the new leadership. It went down next year due to demonetisation and then again due to GST implementation and then due to finance availability and higher outstanding with government payments and compliance matters," it added.

"Our survey is a clear indicator that the TMSME sector is in a critical condition at this moment of time and we feel the Government of India needs to address the issue with a lot more seriousness and urgency," said K E Raghunathan, the national president of AIMO. 

The AIMO also provided a list of suggestions to be implemented to create job opportunities based on the results of the survey. The suggestions include providing a salary subsidy to MSMEs for employing fresh engineers and NSDC-trained manpower for the first six months and lowering of the minimum wages prescribed as per the Act for the TMSME sector and start-up enterprises to enable the creation of new Jobs. TMSMEs must be allowed to use 50 per cent of their workforce as apprentices as this will also enhance skill development in the country.

Raghunathan added that companies that were making a profit during 2014–15 have come down significantly in the past few years.

For example, if 100 companies in the trader segment were making profits in 2014–15, only 30 are making profits in the current year. The drop in the number of profit-making companies was to 47 out of 100 for micro-scale industries, to 65 out of 100 for small-scale industries, and to 76 out of 100 for medium-scale industries.  

To improve the situation, AIMO pushed for the supply of raw materials such as steel and aluminium to MSMEs at a lower subsidised cost by opening steel ration and fair price shops at all industrial estates. It also pushed for reduced interest rates for short-term and long-term finance, along with higher reservation of procurement in government purchases from MSMEs. 

Sectors that require immediate revival and need a great degree of assistance, according to AIMO, are housing, textiles, automobiles, power, match industries, stone industry, plastic, tannery and consumer products. 

Their immediate requirement would be that the dues from the government -- whether it is GST refunds, TDS Refunds or dues in payments for supply -- should be cleared within 15 days. 

These sectors also require the exemption limit for the minimum threshold turnover to be increased to Rs 20 million. The levy of GST at 18 per cent for domestic services -- like AMC of appliances, installations and repair works done on vehicles -- and on sale invoices to individuals who can not claim input credit must be waived off, said the people who participated in the survey.

The government changes policy too fast and it does not offer any scope for TSMSE owners to study, understand and implement the changes as they are not technology savvy, they added.