CHAPTER-1

INTRODUCTION
1.1 Introduction

The MSMEs (Micro, Small and Medium Enterprises) sector has contributed

remarkably towards the Indian economy and for this reason they have always been called the

‘Engine of Growth ‘for developing economies .Micro enterprises plays a significant role in

the employment generation opportunities and also it encourages self-employment and

entrepreneurship among the unemployed youth.1According to MSME Annual Report 2016-

17,the number of MSMEs are 512.99 lakhs and employment in MSME sector are 1112.28

lakhs.2

Thus, the Indian Government has realized that the development of micro enterprises is

necessary for generation of employment and furthering of activities that generate income

among the poor, and also for encouraging of self-employment and the ability to start a

business on its own, among the unskilled youth in the country.3

Micro enterprises have always appeared as an energetic and most powerful sector of

the Indian economy over a long period of time. They play a pivotal role in providing huge

employment opportunities with a very less amount of capital than large scale industries. They

also help in development of industries in the backward and rural areas to an extensive scale,

thereby reducing regional imbalances, which assures fair and impartial distribution of

national income and wealth. They provide necessary support to the primary activities of large

scale industries and also and contributes hugely to the development of the country, both

socially and economically. Craftsmen are the main base of these micro enterprises which are

located in the rural and semi-urban areas of the country and who use local expertise and funds

and sell their products locally in the same region. These enterprises require very less

investments in plant & machinery and provide huge part-time employment. They are

1
involved in activities like khadi, handlooms, sericulture, coir, knitting, bidi-making, wood-

carving and other handicrafts and have expanded themselves throughout the country.4

Micro enterprises play an important role in the present scenario, which witnesses the

fall of economic situations, by creating jobs that are very high in demand. These enterprises

are sole proprietorship but with the access to support, training and finance, individuals have

been able to build and extend their own micro enterprises into operations that increase not

just their family’s source of livelihood but also create new jobs in the regions. As the industry

grows, the professional persons increasingly give attention on the encouraging conditions and

the resources required for micro enterprises to provide better quality jobs.5

The Indian economy flourishes with the help of creation of enterprises. The MSMEs,

through new ideas of business, have been contributing to development of entrepreneurial

behavior. They are widely scattered across different sectors of the economy resulting to

multiple span of products and services to meet demands of local as well as international

markets. The contribution of MSMEs in GDP is 6%, 33% in manufacturing sector and 45%

in exports. This shows the valuable contribution of the MSME sector in the economy, both in

terms of manufacturing and services.6

The small firms are showing notable growth and contributing beneficially in the gross

domestic product and providing considerable employment opportunities. But at the same

time, greater unification with the international market has posed numerous challenges and

threats for micro enterprises, which is vast than those faced by large scale enterprises. Growth

of micro enterprises has been set in motion by fresh investments in heavy and basic

industries.7

There must always be an ability to nurture micro enterprises as they are a source of

economic authority of the poor, to make them financially independent and to make them an

2
essential part of the market based economy. Its significance has been a major concern of most

successive governments in any developing countries.8

1.2 Significance of MSME Sector:

The micro, small and medium enterprises are the pillars of economic growth of all the

developed and developing countries in the world. They have played a very prominent role in

developing the country regards to employment creation, minimizing regional disparities,

encouraging manufacturing capabilities, equal distribution of wealth and largely contributing

to Gross Domestic Product (GDP).India has observed a huge growth in this sector despite

having problems of infrastructure, linkages with proper markets and institutional credit flow.

Following are some of the importance of MSME sector in the development of India in

terms of both economic and social development.

1. Employment Generation: In India, there are 1.2 million students becoming

graduates every year and among them 0.8 million are engineers. In the whole

world, there is no such economy to provide jobs to so many fresh candidates. In

such a situation, MSMEs are blessings to so many fresh manpower as the

enterprises which fall in this sector require very low capital to start the business.

Hence, it generates huge employment opportunities for such unemployed youths

of India with their own source and inspiration of livelihood.

2. Economic Stability: Today, the MNCs (Multi National Companies) are

purchasing auxiliary products and semi finished products from these small

enterprises, creating a linkage between MNCs and MSMEs. The contribution of

MSMEs to exports, manufacturing and employment has also benefitted other

3
 sectors of the industry. As a result, it has brought about economic stability in the

whole system of industry.

3. Provides overall growth: The Ministry of MSME has marked ‘overall growth’ in

the top of its agenda. In India, nearly half of the wealth is owned by some of the

esteemed high ranked people of the society, which is because of unequal

distribution of wealth. Poverty stands as the main problem for development of

India. In such a situation, inclusion of marginalized sections of the society is a big

challenge in the hands of the Ministry of Micro, Small and Medium enterprises

(MSME).

4. Less Indirect Expenses and Labor: In these industries, the labor requirement is

very low and does not need a very highly skilled labor. On the other hand, in large

scale industries, there is always requirement of professionals managed by human

resource management professional in order to retain them in the business. As a

result of which the indirect expenses incurred by the owner of the industry is very

high. But in case of an MSME, these indirect expenses are very less and adequate

labors are available.

5. No Complexity in the Structure of Management: These industries require very

less capital to start their business. Decision making becomes simple and effortless

as resources are limited within the reach of the owner. They don’t require any

professional from outside to manage their business. The owner controls

everything himself single handedly. Its organization is very simple and easy. But

in case of large industries, a professional is required in every department for its

management and control as its organization is very complex in nature.

4
 6. Helps in “Make in India” Possible: This is another important initiative by the

prime minister of India. To convert this project into reality, the MSMEs are of

great help. These industries can manufacture good quality goods at a fair price

making it available for all the people of the country. For this purpose, the

government has also directed all the financial institutions to lend credit to the

MSMEs for making this project fruitful.

Micro, small and medium enterprises are the most important sectors of the society.

They have become the backbone of the Indian economy. They are providing huge

employment to the unemployed and unskilled youth, encouraging exports and also providing

financial institution to lend them loan at reasonable rates. Therefore, the government should

take utmost care of these industries by making mandatory for MSME registration and helping

the financial institutions to give more loans at reasonable rates so that these industries can

sustain in the industrial sector.9

In ancient times, Assam has been land of peace and prosperity. Assam’s per capita

income was 4% above the national average and one of the rich states at the time of

independence. But at present, Assam is the most problematic and poorest state of the country.

Many problems have suppressed the state for some time like huge unemployment, unskilled

youths, financial crisis, poverty, terrorism, floods and social and economic backwardness. It

has become one of the poorest states of the country and its per capita income is less than 60%

of the national average. The per capita income between Assam and rest of the country has

been continuously becoming wider and wider and if this continues the same, by 2020, the per

capita income of Assam will be only 40% than that of the whole country.10

In such a situation, large scale industries cannot be set up as it requires huge

investments and skilled youths. The Assam government announced ‘the industrial and

5
investment policy of Assam, 2014’ which will be for a period of five years and has identified

promotion of Micro, Small and Medium Enterprise (MSME) sector as its “priority area”. The

contribution and importance of the micro and small industries in terms of economic growth is

to bring in overall growth. The role of micro and small enterprises (MSEs) in employment

generation, initiating entrepreneurial habits and new ideas has been always remarkable and

utmost necessary in the economy. The policy also emphasized in encouraging traditional

industries of the state with the help of some specially designed outlook. Government will

have to take the initiative of building a huge pool of skilled and un-skilled youths within the

state so that they can earn their own livelihood and earn their own income.

The main objectives of this policy were:

a. To support for investment in MSME sector in the state.

b. To make more employment opportunities and income in the rural areas of the

state.

c. To increase GSDP(Gross State Domestic Product) through growth of

economic activities like manufacturing and service sector

d. To create a huge group of skilled youths to erase unemployment from the

state.

e. To give special attention to local resources so that they are used to the

optimum extent and not discarded.11

1.3 Definition of MSMEs

In recent years, all micro, tiny, small and medium enterprises are clubbed in one

broad group as Micro, Small and Medium enterprises (MSMEs).After the enactment of

6
Micro, Small and Medium Enterprises Development (MSMED) ACT, 2006, the small and

medium sector has been clearly defined as micro, small and medium enterprises with effect

from 2nd October, 2006.12Moreover, separate investment limits have been prescribed for

manufacturing and service sectors of micro enterprises which are as follows:

a)Enterprises engaged in the manufacture or production of goods pertaining to any industry

specified in the first schedule to the industries( Development and Regulation) Act,1951

where investment in plant and machinery doesnot exceed Rs. 25 Lakhs and;

b) Enterprises engaged in providing or rendering services where investments in equipment do

not exceed Rs. 10 Lakhs.13

The main features of MSMEs are:

(a) They are started by a single entrepreneur or a group of entrepreneurs using their own

new ideas and expertise.

(b) They have a very flexible organisation. There are less number of people and the

owners are directly involved into the business.

(c) Their indirect expenses are very low leading to less cost of production.

(d) They are very much attracted towards adaptability. They can adapt new technology

very easily and within a very short span of time.

(e) They are enable to utilize new ideas very quickly, by which they can hold the

international markets easily and in an organized manner.14

7
 In India, the micro enterprises have included ‘Vegetable and Fish market, readymade

garments, Dairy farming, Poultry Breeding, Pottery, Handloom, Soaps, Jams, Envelops.

Masalas, Pickles, Phenyl, Paper bags and Nutrition mixes’.

In the developing countries, micro entrepreneurs include ‘street vendor and those

involved in a variety of service and repair functions’. In developing countries, women have a

very significant role to play in these industries.15

1.4 Micro Enterprises for Economic Development:

Economic development is the permanent and joint efforts of the society and the

government to increase the standard of living of the people including their health conditions.

It refers to unbiased society, improvement of the people’s self-respect and conditions of

living. Economic development is also regarded as the upliftment of all the aspects of the

present society. It involves development of human resources, educating the society,

improvement of the basic infrastructure, improvement of health and other areas that aim at

increasing the general living of the citizens. It will only be successful if the whole country is

willing to give their level best towards its achievement. Many economists have suggested that

in order to achieve economic development, each country should try to attain standardization

and industrialization. It implies an increase in the per capita income of each and every

person.16

The Indian economy was far away from the world economy because it was dominated

by policies which were influenced by socialists, owned by state sectors and regulations which

were very rigorous and extensive. Then from the mid 1980s, the complete situation started

changing, when through economic liberalization, India started opening its market for others.

This brought a huge change in the economic development of India. The economic

development of India got enhanced through the economic reform of 1991 and again it

8
renewal in 2000. From then onwards, the economic development of India has changed

completely.17

The contribution of the development of the MSMEs enhances the increase in the per

capita income, i:e, economic development in many ways. It generates huge employment

opportunities with less capital investment, promotes more equitable distribution of national

income, makes effective mobilization of untapped capital and human skills and leads to

dispersal of manufacturing activities all over the country, leading to growth of village ,small

towns and economically backward regions. This also encourages balanced economic

development of all the regions of the nation.18

Micro enterprises mainly relates to initiating, enhancing and maintaining economic

activities for the production and distribution of income and wealth. It involves identifying

individual freedom, new ideas, taking risks and independence. In developing countries, MSEs

contribute to the majority of firms and large share in generation of employment. MSEs

constitute the most dynamic segment of many transformation and developing economies. The

role of micro entrepreneurship in erasing poverty and economic development in developing

countries is very remarkable. It has already been proved that micro-entrepreneurship

contributes to a very large extent to economic growth and development.19

1.5 Impact of Globalisation on Micro Enterprises:

Globalisation is an unavoidable process in which the world has been brought closer

through exchange of information, products, jobs, culture, goods and knowledge. The world is

merged into one enormous market, providing all necessary things by removing all restrictions

on buying and selling among the countries. The economic process takes place through

merchandizing goods and services, circulation of funds and motion of financial affairs. In

India, globalisationn is collaborating the world economy with the economy of the country.

9
The process of globalisation got its actual push from the new economic policy introduced by

the Indian government in July 1991, at the instruction of the World Bank and [Link]

economic process has led to an unmatched competition amongst huge MNCs and small

Indian enterprises. The micro and small enterprises are the important parts of the industrial

sector of the country. They form the supreme part of Indian industry by bestowing to a

notable proportion of employment, production and market overseas.20

Globalisation and liberalization has created many favorable opportunities for the

micro and small industries in India. After the establishment of WTO in 1995, there was

limitation of buying from abroad duties and dismissal of quantifiable reservations, which

unlocked Indian market to overseas goods and overseas market to Indian small industry. Such

favorable time was a motivation to many micro and small firms in India to amplify their

competition to pierce the global market. Many well organized and abroad placed small firms

have benefitted from this development. This was only possible when these small and micro

enterprises could become traders to foreign large scale industries. The effects of devolution

and globalization on development of micro and small industries have emerged from the

opening of the Indian economy. The problems of micro and small industries in India, which

would lead to lesser quality and productivity, are industrial degeneration, absence of strong

and dependable economic infrastructure and decreased growth of credit inflow. Thus, in such

a situation, it is utmost necessary to strengthen the conduct of MSMEs in the period of

globalisation.21

1.6 Statement of Problem:

In the entire North Eastern region of the country, Assam has a very distinctive place

as it is the main entrance to the other states of the country. Resources like forest, mineral, tea

and so on are highly adequate in the state. But in the field of industrialization, Assam is still

10
lagging behind with all the potentialities of development. Majority (87%) of the state’s

population depend upon agriculture as their main source of livelihood since they live in the

rural areas of Assam. As the population of Assam is increasing in an abnormal rate, the

dependency on agricultural land is also increasing. One sixth of the families inhabiting in the

rural areas of Assam are land less and nearly one half (including landless) holds, less than 2

bighas per family. In such a situation, development of micro enterprise helps to a great extent

in the growth of the economy of the state, both socially and economically.22

The MSMEs in Assam are growing in a very low pace. There are huge potentialities

of these enterprises to grow in the state.23The rate of industrial growth in this sector can be

assessed from the fact that there are 43,332 MSME units in Assam providing employment to

2.49 lakh people by the end of 2016 as per Economic Survey, Assam,[Link]

employment generated by Micro Enterprises in Assam is the highest (54.76%) as compared

to the Small and Medium Enterprises and also to the entire North East Region (55.45%)

according to Fourth All India Census of Micro, Small & Medium Enterprises 2006-

07(Registered Sector)

There is vast potentiality of the young people and women of Assam in the micro

industries sector and this can result in the development of the economy as whole. But despite

being the generator of employment next to agriculture, micro enterprises have been facing

huge problems in running their businesses like no professionalism, poor credit history,

inadequacy of loan, less technologies, no business views, high interest rates, inadequate

supply of raw material, market, lack of skilled labour, transport, lack of clear plan, rods,

power and high wage rate. These problems are to be erased. The quality and technological

knowledge of these micro enterprises are to be improved, so that they become more powerful

and purposeful.

11
 The preamble of the study will make the assessment of the potentiality of micro

enterprises in Assam, which plays a very important role in economic development of the

backward state. The purpose behind the study is that in a state like Assam, there is a good

potentiality of economic development through the development of various micro enterprises.

Though micro enterprises are very small type of enterprises, yet they can play a forceful and

vital role in the industrialization of developing nations. They provide large scale employment,

coupled with low capital output ratio, balanced regional development [Link], as a whole they

help in the improvement of socio-economic life of the people.

1.7 Review of Literature:

So far, a number of studies in this area of research have been conducted by

researchers, academicians, government of India, government of Assam and Non-

Government agencies. Following studies have been done to find out the research gap in this

field and for the better understanding of the topic.

[Link] in his book (1983) on “Industrialization-Concept and Issues” discovered that the

small scale industrial sector is a significant part of the country’s economy as a whole and not

only a part of industrial sector. He found that if these industries are developed properly, they

can raise income group, generate huge employment and can bring in more prosperity and

balanced economic development in the region.24

Vasant Desai in his book (1983) on “Problems and Prospects of Small Scale Industries in

India” opined that growth of small scale industries is the main cause for fast development of

industries in India. Most of these industries are working with problems like low levels of

technical knowhow and counseling, weak infrastructure, lack of raw materials, less capital

and credit facilities, inadequate facilities for market analysis, research and development and

12
unequal distribution system. They are also not strong in marketing their products other than

their localities especially in markets outside their countries.25

[Link] in his paper (1985) on “Rural Industrialization in India” opined that the rural

industries programmes would require help regularly. Therefore, the infrastructures on training

and marketing would have to be developed according to the maintenance and beneficial

growth programme of the rural industries.26

[Link] in his study (1988) on “Industrial Development in a Backward Region –

Dynamics of policy” stated that the small industries sector which is allotted the significant

role in the accomplishment of our goals, both socially and economically, is considered to be

the most important sectors of the country. However, as compared to other developed

countries, these enterprises remain to be lagging behind in regards to cost, machine,

technology and design.27

[Link] in his book (1989) on “Management and Development in Small Scale

Industries” highlighted that small industries also play a significant role in hilly areas like

Jammu & Kashmir. He also stated the state has less potential for large industries and is best

suited for small industries. The state is industrially backward for many reasons. Some of them

are lack of raw materials, power, lack of technological knowledge, inadequate entrepreneurial

culture, geographical location, lack of resources, lack of outside investors and businessmen

and no role of financial institutions for granting credit.28

Vinod Tiwari, Joseph Philip, Amar Nath Pandey in their paper (1990) on ”Small Scale

Industry-Success and Failure” are of the opinion that Success and failure of an enterprise is

largely depend upon entrepreneurs initiative, attitude and operation skill etc. A newly

established enterprise should not only avoid huge investment in the initial stage, but they

should also opt for small investment. Slowly and gradually they can increase their

13
investment. ‘Don’t put all the eggs in one basket’ are the main concept for their study. The

entrepreneurs should keep some amount in their hands for future expansion programme,

product development, purchasing of new equipment etc. which can yield a good return on

investment in near future.29

Inderjeet Dagar in his study (1993) on “Personal Problems and Its Management in SSI”

found that proper management of human resources is very much important for any SSE to

flourish. In present day, man has been replaced by machines to carry out most of the

enterprise activities. The human effort and skill is important for SSI to survive and grow in

the market. The use of scientific method and techniques can enhance the productivity of an

enterprise. The employee should be given proper welfare services and other benefits and

incentives which can act as a motivating factor for an employee to give their optimum

effort.30

S. Giriappa in his book (1994) on “Rural Industrialisation in Backward Areas” stated that In

order to promote rural Industrialisation, it is required to give importance to rural and cottage

industries. Most of these industries are agro-based, so agriculture becomes very crucial and to

be paid attention, which will result in optimum utilization of local resources, higher

employment, infrastructure development and technological development.31

B. Bhusan in his study (1995) on “Promoting Rural Industrialisation for Higher

Productivity and Employment Generation” stated that there are huge potentialities of the

people of India in the small industry sector and this can result in the development of the

Indian economy as a whole. He emphasized development of the minority group like women,

S.T, and S.C through numerous training programmes. The KVIC can also help in developing

the rural areas by following the policy and regulations of the Government.32

14
[Link] Rao in his study (1995) on “A Development of Small Scale Industries, Role

of DIC” opined that state like Andhra Pradesh has relatively done well after the establishment

of DIC in comparison to all India performance. He emphasized on overall development of

SSI in the entire region. For the development of backward regions more funds should be

allocated and DIC personal should take some extra initiative and should put some more

effort.33

[Link] in his study (1998) on “Development of Micro, Small and Medium enterprises of

India: current scenario and challenges” has observed that at the time of globalisation, MSMEs

have to face cut-throat competition. They have particularly to improve themselves in the

fields of marketing, management, diversification of products, development of infrastructure,

up gradation of technology. Moreover these enterprises have to speed up their growth and

development factor and they have to form ‘strategic alliance’ with entrepreneurs of

neighboring countries. He also suggested that ‘data bank’ on industries to guide the interested

entrepreneurs including investors from around the globe is also a huge requirement.34

[Link] in his book (1999) on “Entrepreneurship Development in North East “stated that

apart from medium to big industries, another important segment was encouraged by the

planners was the small scale industry sector. These small scale and micro enterprises besides

being instrumental to the economic development and export [Link] India, micro and

small enterprises allow the rural poor including some of the most marginalized and

vulnerable stratum such as rural women, youth and landless to diversify their incomes ,create

new sources of economic growth and generate additional employment including self-

employment in rural areas.35

[Link] in his paper (1999) on “Institutional Credit to SSI Sector: Role of Banks and

SFCs in the Post-Reforms Scenario” examined the trends in loan provided to MSMEs by

15
Scheduled Commercial Banks (SSBs) and the State Financial Corporation’s (SFCs) and their

interstate disparities. The study found that commercial banks continue to play an important

role in financing MSMEs. The credit granted by these commercial banks have very less

interest and are free from any complex documentation, which makes the borrower feel

relaxed and comfortable while procuring the loan. 36

[Link] in his study (1999) on “Institutional Assistance for Small Scale Industries in

Tiruchirapalli District” examined the various kinds of assistance given to small scale

industries with the main objective of identifying institutional assistance for the development

of small scale industries and the problems faced by these industries in Tiruchirapalli District

of Kerala. He concluded that the greatest problem faced by the entrepreneurs was lack of

adequate finance, and also these enterprises face problems relating to the adequacy of raw

material, selling of products and technological and administrative problems. He also stated

that there are complex documentation procedures in availing loans from financial institutions

and there is no coordination between the promotional institutions and government agencies.37

Sunil Kumar Saikia in his paper (2001) on “Small Scale industries in Assam- A study in

Greater Guwahati Area’ observed that Guwahati has all the required facilities of an

entrepreneur. But, still, finance is the most important problem of the small industries which

can be solved by healthy interaction between the bankers and the entrepreneurs. Thus, the

success will be achieved in the entire north east region.38

J.S Juneja in his book (2001) on “Small and Medium Enterprises” opined that the present

micro and small industries have to try their best to adapt themselves in the changing

environment to face the cut-throat competition, both in the national and international levels.

New industries have to apply new technologies and ideas to continue in the market. They

require special package according to their finance, design and marketing.39

16
Balin Hazarika in his study (2005) on “Management Small Enterprises, A Case Study in

Sonitpur District of Assam” suggested that the government should take some initiatives to

build small scale industries in the Sonitpur District which are based on agriculture. He also

stated that the finished products of these industries will be used as raw materials for the large

industries, which will enhance the small sector enterprises in the backward regions of the

state. He was also of the view that the training programmes given to the small entrepreneurs

should include all the aspects of the enterprise rather than only training and supporting the

entrepreneurs financially.40

Ruddar Datt and [Link] in their book (2006) on “Indian Economy” stated

that government also supports the idea of developing small industries along with the large

industries. These industries will be able to survive in the long run only if they are

technologically innovative, capable of entering into healthy competition and produce quality

goods for the potential consumers.41

Neeta Baporika in her study (2007) “Entrepreneurship Development & Project

Management” stated that the contribution made the small sector is very remarkable in all the

aspects of growth and development of an enterprise. But the most notable is the growth in the

exports by these micro and small industries.42

[Link] in his book (2007) “Globalisation and Development of Backward Areas”

opined that the credit given by the financial institutions like banks, should be increased for

the development of MSME’s. This is because of the cost of raw materials used by the MSME

owners have increased to a very great extent. Inadequate supply of raw materials and

application of technological knowledge is another constraint for these micro and small

industries. He opined that steps should be taken to use proper technology in these industries

for optimum use of local and human resources of the nation.43

17
Amit Singh Sisodiya in his paper (2008) on “SMEs in India: Future Perfect” highlighted

that SME’s are an important part of the nation, either developed or developing. This sector is

the second largest generation of employment next to agriculture in the country. But, despite

of its importance in the economy, they are facing lots of problems. He suggested that these

problems should be eased and improves the quality and technological knowledge of these

industries so that the SME’s can be purposeful and useful.44

Pooja in her paper (2009) on “Micro, Small and Medium Enterprises in the Indian

economy- Business Development Strategies” stated that in developing countries, the credit

worthiness of the small entrepreneurs is very low and hence granting any credit to them

becomes very risky for the financial institutions. Government should intervene into these

situations of the industries and provide some valuable solutions.45

K. Lavanya Latha (2010) on “Small Scale Entrepreneurship” found that entrepreneurship is

spreading in all the areas of the country but at a very slow speed and is confined to only high

status social people. He suggested that it must be dispersed even to the remote sections of the

society for overall economic growth and development of the nation. Only then, India can

prosper and face rapid Industrialisation.46

Baruah and Mali,(2011) on “Entrepreneurship and its Role in the Growth of Micro and

Small Enterprises: a case study in Assam” found that the MSMEs in Assam had registered an

average growth of 20.63% per annum from 1987-88 to [Link] was accompanied by a

45.3% in investment and 89.5% in [Link],there is an element of upward bias in

estimates of growth in investment and output as price rise over the years has significantly

inflated their values. The whole study is based on secondary [Link] can be concluded from

the study that entrepreneurial performance indicated by the output is affected largely by the

quantum of investment rather than the level of employment.47

18
Asghar Afshar Jahanshahi in his paper (2011) on “The Relationship between Government

Policy and the Growth of Entrepreneurship in the Micro, Small and Medium Enterprises of

India” concluded that micro, small and medium enterprises (MSMEs) are a critical economic

factor in India. They make up a majority of the domestic business transactions and at the

same time play a significant role in business outside the country. They have emerged as a

vibrant and dynamic component of the economy by virtue of their significant contribution to

GDP, industrial production and exports. However, the most remarkable contribution of this

sector is towards generation of employment which is second only to agriculture. He also

stated that while the recent year’s shows employment in agriculture sector has been

decreasing, large scale industries are also experiencing jobless growth. In such a situation, the

main responsibility for job creation rests with unorganized sector including micro enterprises.

The MSMEs contributes significantly to the manufacturing output, employment and exports

of the country.48

Doodamani & Leelavathi, (2011) on “Development of Micro Enterprises in India &

Karnataka” suggested that development of MSMEs is required for the development of an

economy. Therefore, they stated that in order to enhance the growth of these industries, at

state level, Department of Industries and Commerce (I&C) and the DIC Zilla Panchayat

Wing, Khadi and Village Industries were established. The employees were given best training

for the growth and development of these MSMEs.49

[Link] in his study (2012) on “Entrepreneurship in Cooperatives” observed that the

main constraint of the micro and small industries is inadequate fixed and working capital. He

also stated that these industries do not have fair credit worthiness in the market like the big

industries nor they have business views for which the financial institutions can lend them

enough capital.50

19
[Link] and A. Nilasco Arputharaj in their book (2012) on “Entrepreneurship

Development and Small Business Management” stated that finance has always been the most

important problem of micro and small industries. Finance is required in purchasing and

keeping raw materials, stocking of finished goods till they are sold out and paying expenses.

They also opined that these entrepreneurs have very less to offer as security and thus,

sometimes have to sell at a very less profit or no profit at all. They also need capital to update

their machinery and to expand their enterprises. But adequate loan is not available to finance

the same. Government should erase these problems for these enterprises to grow properly.51

George Mathew in his study (2013) on “Changing Scenario of Small Enterprise in India”

observed that during the post reform period, the small industries has shown a slow growth in

regards to employment, units, output and exports. He also observed that they were quite

efficient in the pre reform period as they have shown a remarkable growth in all the aspect of

the industries.52

[Link] in his study (2013) on “Credit Rating Agencies and Financing of SMEs”

revealed that to increase the ‘credit worthiness’ of the MSMEs, the ‘credit ratings’ should be

increased. He suggested that this activity helps in enhancing the grant of credit fast and easier

from the financial institution to these micro and small industries.53

T.K. Jisana & P.V Basheer Ahammed in their study (2013) on “Role of Cluster

Development Programme on Micro, Small and Medium enterprises” stated that government

is introducing many policies and initiatives for the growth and development of the micro and

small industries. They stated that the most important and significant among them is CDP

(Cluster Development Programme). They were also of the opinion that MSMEs are regarded

as the main source of growth and development of an economy and will ever remain so.54

20
Biswajit Das and Kandarpa Kr. Barman in their study (2013)on “A study of Micro-

Enterprises in Hajo Development Block, Kamrup (Assam)” concludes that the micro and

small enterprises have been considered as a powerful instrument for realizing the twin

objectives,i.e., ‘accelerating industrial growth’ and ‘creating productive employment’

potential in the backward areas. The development of the most of facilities essential for

industrial growth like power supply, rawmaterial, marketing of products, adequate capital and

supply of labour, technical know-how etc. have not yet crossed the minimum threshold

especially in the block, which is still a major obstacle in the development of micro

enterprises. These industries not only provide employment opportunities with relatively small

capital investment but are also a subsidiary source of employment in the block. Keeping in

view the role of micro-enterprises, provision of institutional support towards a proper training

in acquiring the necessary skill in running enterprises and infrastructure facilities should be

the first priority for the government.55

Sanjeeb. K. Jena in his book (2013) on “Micro Finance and Micro Enterprises in India”

highlighted cluster approach for micro enterprises. These enterprises are able to innovate,

grow and successfully come into competition under fast changing demand conditions of the

potential consumers. Under liberalization, these clusters have gained more importance. These

industries have to face now more competition both in the national and international levels.56

Kanchan Bhatia and Pooja Choubey in their study (2014) on “Problems and Policy

Measures to help MSMEs”opined that in many developing countries, micro and small

enterprises dominate the industrial clusters. The clustered micro and small enterprises have

many advantages (a) employment creation, (b) generation of foreign currencies through

exports, (c) potential to grow into larger enterprises, (d) domestic producers of cheap import

substitution goods for low-income groups, and (e) producers of components, tools and spare

parts for large enterprises.57

21
[Link] in his book (2016) on “the Economy of Assam” stated that the concept of regional

development was originated from the ideas of Stalin. The idea of regional development

gradually gained its importance in the literature of economic development. The Barlow

Commission in 1937 and The Political and Economic Planning Group in 1939 had mentioned

about the need of regional development and thereby stressed the need for dispersal of some

relevant industries in backward areas. By the term regional economic development we mean

the attainment of economic development of a particular region of the country. Thus it also

includes the process and the strategy to be adopted for the economic development of a

particular region along with the other regions of the country.58

1.8 Gap in the Existing Research:

After going through the existing literature, there is ample scope to study in respect of

development, functions and prospects of the micro enterprises in the region. Various studies

have been done on the related topics but this specific topic wants to bring out the abilities and

potentialities of the micro enterprises which will facilitate economic development in the

region. The present work is an attempt to fill up the gap and to create a new stock of

knowledge. In this context, the topic “Role of Micro Enterprises in Economic Development

of Assam with special reference to the Kamrup District” has been selected and objective

based research queries for the proposed study have been framed.

1.9 Scope of the study:

It is very important to study all the aspects of micro enterprises in Assam but it is not feasible

to do [Link] the following areas were found important during the study:

Ø Study of rural and urban areas of Kamrup District of Assam

Ø Problems arising in the course of business of Micro Enterprises in Assam

22
 Ø Micro Enterprise as a source of livelihood for majority of people of Assam as whole.

Ø Study on woman entrepreneurship in the Kamrup district.

1.10 Objectives of the Study:

The present study has been undertaken with the following objectives.

1) To study the contribution of the micro enterprises in the growth of employment

generation in the state of Assam.

2) To identify the problems faced by the micro enterprises.

3) To examine the factors that affects the starting of the units in Kamrup District

1.11 Research Queries:

Ø Whether the growth of micro enterprises can help in generation of employment or

not?

Ø What are the problems faced by micro enterprises?

Ø What are the underlined factors that affect the starting of the units in Kamrup District?

1.12 Methodology:

Based on the nature of the objectives, research methodology is designed accordingly.

1.12.1 Sources of information:

The study requires both primary and secondary sources of data.

i. Primary source: the depth of the study is based on the primary data and for this field

survey has been done to collect primary data from the micro enterprises in the district

with the help of questionnaires. This has been done with the objectives of knowing

23
 the role of micro enterprises and their problems in regard to income, investment,

production, sales, profits, employment, training etc. Only those industrial units are

selected which are registered under District Industries and Commerce Centre, Kamrup

(Metro), Bamunimaidan and District Industries and Commerce Centre, Kamrup

(Rural), Mirza and running actively. The sick and shut down units are excluded from

the study.

The researcher had also collected information from Directorate of Industries through

Direct Interview Method.

ii. Secondary data: the secondary data has been collected from various secondary

sources such as Micro, Small and Medium Enterprises Annual Report 2016-17,

Fourth All India Census of Micro, Small and Medium Enterprises 2006-07, Ministry

of Micro, Small and Medium Enterprises, Economic Survey, Assam, 2016-17, NEDFi

Databank, Statistical Handbook, reports of various MSMEs related studies and host of

websites.

1.12.2 Study area:

The study covered undivided Kamrup District of Assam (Urban & Rural)

1.12.3 Universe of the study:

Universe of the study comprises all the Registered Micro Enterprises of Kamrup (Urban)

and Kamrup (Rural).

24
 1.12.4 Size of the population:

The total size of the population is 1604 Micro Enterprises in the Kamrup (Urban & Rural)

areas. Number of units in Kamrup (Urban) area is 1,064 units and Kamrup (Rural) area is

540 units.

1.12.5 Sample size:

The researcher has applied Taro Yamine (1994) formula for determining sample size. The

sample size of the study is as given below:

Sample size (n) = N Where N=Size of Population

1+N (e) 2 e=probable error 0.05

=321 units 1=Theoretical Constant

1.12.6 Sampling frame:

The list of Registered Micro Enterprises provided by District Industries & Commerce Centre

(Urban & Rural) is undertaken as sampling frame.

1.12.7 Mode of sampling:

The researcher has applied random sampling technique for selecting the respondents. In this

case, the population of the study is divided into two groups, .i.e. Micro Enterprises from (a)

Urban areas and Micro Enterprises from (b) Rural areas.

25
The researcher has chosen respondents from two groups proportionately as shown below:

Category No. of Respondents

Urban 213

321*1064/1604

Rural 108

321*540/1604

Total Size of Sample 321

1.12.8 Period of the study:

To examine the income and employment generation of micro enterprises, the

researcher has chosen the period from 2008-09 to 2012-13.

1.12.9 Statistical Tool of Analysis:

Analyzing the collected data on the basis of classification tables and estimating means,

SD, percentage and has been presented diagrammatically and graphically. The cross

tabulation, correlation, regression, ANOVA test and factor analysis has been utilized to

establish relationship among various variables with the help of computer software like

SPSS (version 16.0)

26
1.12.10 Limitation of the study:

(i) During the time of collecting primary data, the entrepreneur respondents were

suspicious and hesitated to give any information. May be they didn’t wanted

to reveal the information or they couldn’t remember them. But once they were

convinced that the information will be used only for the purpose of research

and study and would be maintained confidential, they felt easy to provide

them.

(ii) Majority of the respondent enterprises did not maintain proper and uniform

records or accounts of their business. Also, the entrepreneur respondents could

not disclose accurate information though the sectors were organized sector.

However, the researcher managed to gather the required information as much

as possible for the purpose of data analysis.

(iii) The study is limited to 321 units as sample which was determined using Taro

Yamine’s formula of total 1,604 units. It is limited only to micro enterprises.

Small and medium units are excluded from the [Link] those industrial

units are selected which are registered under District Industries and Commerce

Centre, Kamrup (Metro), Bamunimaidan and District Industries and

Commerce Centre, Kamrup (Rural), Mirza and running actively. The sick and

shut down units are excluded from the study.

(iv) All the aspects relating to the Micro Enterprises in the District could not be

covered in the present study leaving scope for further research in the field. To

make the study meaningful and purposeful, the researcher has made all efforts,

which may act as a landmark for further studies in the field.

27
 REFERENCES:

1. Ravi,Shamika (2009) Entrepreneurship Development in the Micro, Small and

Medium Enterprise Sector in India

2. MSME Annual Report [Link] of India. Ministry of Micro, Small and

Medium Enterprises,p-11

3. Ravi,Shamika (2009) Entrepreneurship Development in the Micro, Small and

Medium Enterprise Sector in India

4. Ahmed Jaynal Ud-din & Rashid Md. Abdul (2014),Micro, Small and Medium

Enterprises (MSME’s)in India, New Century Publications, New Delhi, India

5. Datt Ruddar and Sundharam, K.P.M. (2006), Indian Economy, [Link] & Company

Ltd., New Delhi.

6. MSME Annual Report [Link] of India. Ministry of Micro, Small and

Medium Enterprises,p-10

7. Poddar Sandeep & Jain Natika,(2014),Credit Flows to MSMEs in Lohana Sarika (ed.)

Micro,Small and Medium Enterprises (MSMEs) for Inclusive Growth, New Century

Publication, New Delhi

8. Jena Sanjeeb, K.(2013),Micro Finance and Micro Enterprises in India, New Century

Publication, New Delhi,p-28

9. [Link]/2017/09/importance-of-msme-sector-in-india/166912

28
10. [Link]

assam-presented-2014-by-kharingyo-shimrah/

11. Dhar,P.K.(2016),The Economy of Assam: Including Economy of North-East

India,Kalyani Publishers, New Delhi,p-311

12. Dhar,P.K.(2016),The Economy of Assam: Including Economy of North-East

India,Kalyani Publishers, New Delhi,p-706

13. Vijayarani,K.R.(2011),Small-Scale Industries in India: Problems and Policy

Initiatives, New Century Publications, New Delhi,p-17

14. Poddar Sandeep& Jain Natika,(2014),Credit Flows to MSMEs in Lohana Sarika (ed.)

Micro, Small and Medium Enterprises (MSMEs) for Inclusive Growth, New Century

Publication, New Delhi

15. “Women Entrepreneurship leading to Rural Transformation”. The ICFAI Journal of

Entrepreneurship Development.

16. [Link]

17. [Link]

18. Sinha,D.K.,Economics,([Link])

19. Jena Sanjeeb,K.(2013),Micro Finance and Micro Enterprises in India, New Century

Publication, New Delhi

20. Chandraiah,M and Vani,R (2013),The Impact of Globalisation on Micro, Small and

Medium Enterprises, with special reference to India ,Innovative Journal of Business

and Management,October,p-109-

111([Link]

29
21. Singh Davinder and Kumar Ashvani (2013),Globalisation, Problems and

Performance of Indian MSME, 3rd International Conference on Advances in Material

and Manufacturing Technology (AMMT-13)

22. The International Journal of Business and Management (ISSN 2321-8916)

([Link] )

23. ibid

24. Prasad,L.(1983),Industrialization-Concept and Issues,[Link] and Co., New Delhi

25. Desai,Vasant(1983),Problems and Prospects of Small Scale Industries in India,

Himalaya Publishing House, Bombay

26. Sharma,B.K.(1985),Rural Industrialisation in India, in Misra,R.P.(ed.) Rural

Industrialisation in Third World Countries, Sterling Publishers [Link].,New Delhi

27. Patnaik, S.C. (1988), Industrial Development in a Backward Region-Dynamics of

Policy, Ashish Publishing House, New Delhi.

28. Hamid,S.A.(1989),Management and Development in Small Scale Industries, Anmol

Publications, New Delhi

29. Tewari Vinod, Philip Josheph, Pandey Nath Amar,(1990), Small Scale Industry-

Success and Failure, Concept Publishing Company, New Delhi

30. Dagar Inderjeet (1993), Personal Problems and Its Management in SSI, Deep and

Deep Publications, New Delhi.

31. Giriappa, S (1994), Rural Industrialisation in Backward Areas, Daya Publishing

House, Delhi

30
32. Bhushan, B (1995), Promoting Rural Industrialisation for Higher Productivity and

Employment Generation, Kurukshetra, Sept.,Vol.43, No.12, pp-3-7

33. Rao, T. Venkateswar (1996), Development of Small Scale Industries-Role of DICs,

Anmol Publication [Link], New Delhi.

34. Mali, D.D. (1998), Development of Micro, Small and Medium Enterprises of India:

Current Scenario and Challenges, SEDME (Small Enterprises Development,

Management and Extension) Journal, Vol.25, No.4, December.

35. Mali,D.D.(1999),Entrepreneurship Development in North East, Mittal Publications,

New Delhi

36. Ramesha,K. (1999),Institutional Credit to SSI sector; Role of Banks and SFCs in the

Post-Reforms Scenario, The Asian Economic Review,Vol.41,No.1,April,pp.20-31

37. Rajendran, N. (1999), Institutional Assistance for Small Scale Industries in

Tiruchirapalli District, SEDME Journal, Vol.26, No.2, June.

38. Saikia, Kumar Sunil (2001), Small Scale Industries in Assam-A Study in Greater

Guwahati Area, Indian Institute of Entrepreneurship (IIE), Guwahati.

39. Juneja, J.S. (2001), Small and Medium Enterprise, New Century Publications, New

Delhi.

40. Hazarika, Balin (2005), Management Small Enterprise-A Case Study in Sonitpur

District of Assam (unpublished thesis)

41. Datt,Ruddar and Sundharam,K.P.M.,(2006),Indian Economy,[Link] & Company

Ltd.,New Delhi,p-670

31
42. Baporikar,Neeta(2007),Entrepreneurship Development & Project Management,

Himalaya Publishing House [Link].,Mumbai

43. Satyanarayana, G,(2007),Cottage and Small Scale Industries under Five Year Plans

in Satyanarayana, G(ed.) Globalisation and Development of Backward Areas, New

Century Publication, New Delhi

44. Sisodiya Amit Singh (2008) SMEs in India: Future Perfect, in Varma, Anil (ed.)

Small and Medium Enterprises Perspectives and Country Experiences, The Icfai

University Press.

45. Pooja,(2009),Small and Medium Enterprises in the Indian Economy-Business

Development Strategies, New Century Publications, New Delhi

46. Latha K., Lavanya (2010), Small Scale Entrepreneurship, Serials Publications, New

Delhi,pp-179

47. Barua,A.N. & Mali, A.(2011),Entrepreneurship and Its Role in the Growth of Micro

and Small Enterprise: A Case Study of Assam, Small Enterprise Development,

Management and Extension Journal,38(2),pp-69-83

48. Jahanshahi,Asghar Afshar (2011),The Relationship between Government Policy and

The Growth of Enterprises in the MSMEs of India,[Link].,

Vol.06,Issue 01,ISSN 0718-2724([Link]

49. Doddamani & Leelavaathi (2011),Development of Micro Enterprises in India and

Karnataka,SEDME(Small Enterprises Development, Management and Extension)

Journal,Vol.38,Sept.,pp-88-89

32
50. Karthikeyan, M.(2012),Entrepreneurship in Cooperatives, Discovery Publishing

House [Link].,New Delhi,pp-161

51. Dayanandan, R. and Arputharaj, A. Nilasco (2012), Entrepreneurship Development

and Small Business Management, Deep & Deep Publications [Link]., New Delhi,pp-

151

52. Mathew, George(2013),Changing Scenario of Small Enterprises in India, Southern

Economist,Bangalore,March,pp-17

53. Pawar,P.R.(2013),Credit Rating Agencies and Financing of SMEs, Southern

Economist,Bangalore,March,pp-19

54. Jisanaa,T.K. and Ahammed, [Link] (2013),Role of Cluster Development

Programme on Micro Enterprises in Kerala, Southern

Economist,Vol.52,No.07,Aug.01,pp-08

55. Jena, Sanjeeb K. (2013), Micro Finance and Micro Enterprises in India, New Century

Publications, New Delhi.

56. Das,Biswajit and Barman,Kandarpa Kr.(2013),A Study of Micro Enterprises in Hajo

Development Block, Kamrup (Assam),Journal of Rural

Development,Vol.32,No.03,July & Sept.,pp-321-332

57. Bhatia, Kanchan & Chaubey, Pooja (2014),Problems and Policy Measures to help

MSMEs, in Lohana, Sarika (ed.) Micro, Small and Medium Enterprises (MSMEs) for

Inclusive Growth, New Century Publication, New Delhi

58. Dhar,P.K.(2016),The Economy of Assam-Including Economy of North-East India,

Kalyani Publishers, New Delhi,pp-03

33