by February 6, 2012 0 comments

“We feel like the abandoned and battered orphan Baby Falak as the
all-powerful Chief Minister of Uttar Pradesh could not find time even
once during her five year long tenure to meet representatives of the 3
million micro, small and medium enterprises in the state that provide
direct employment to more than 6 million people and livelihoods to over
30 million people,” said Mr V.K. Agarwal, president of the Delhi-based
Federation of Indian Micro and Small & Medium Enterprises (FISME),
an industrial lobby representing the nearly 30 million strong MSME
sector which provides direct employment to more than 70 million people,
the second-largest employment provider in the country after agriculture.

“With just a few good officers remaining in the state, but acting
apathetically in the absence of any political direction, the small and
medium industry in the state just does not know what to do next,” Mr
Agarwal said.

“Industries that could afford it, have already moved out of UP and
many are likely to follow suit as they are increasingly becoming
unviable in many sectors due to such utter negligence and complete
indifference towards the needs of industry,” he said.

“The state PSUs such as Uttar Pradesh Power Corporation Limited
(UPPCL) and others take pride in closing their doors to state
industries and prefer sourcing goods and services from across the UP
borders. While the National Rural Health Mission (NRHM) scam has come
to light, there are similar skeletons in the cupboard of many
departments including power, industry, education and urban
development,” he said.

For example, capital goods like machinery, transformers and several
industrial inputs like duplex board etc. have to suffer VAT @13.5%
against CST @ 0 to 2% in other States.

“In comparison, states in India such as Rajasthan, Tamil Nadu,
Gujarat among others, have erected barriers to protect and promote
their own manufacturing base,” he said.

“Despite a lot of lip service by successive governments both at the
centre and the states and enactment of special legislation such as the
MSMED Act, 2006, the ground reality is that the status of the Indian
MSME sector is worse than that of an abandoned orphan,” Agarwal said.

“Even at the centre, the finance minister has discontinued the
practice of meeting representatives of MSMEs in pre-budget
consultations although if India has to achieve a contribution of 25%
from the manufacturing sector in its GDP, as is the government’s stated
goal, it simply cannot be done by ignoring the MSME sector,” he said.

“We keep comparing ourselves to China but that country has become a
manufacturing powerhouse only because of the importance that their
government accords to the small and medium sector,” Mr Agarwal said.

He said FISME is of the view that political parties despite their
tall promises have not really addressed the question of from where the
‘promised’ jobs will come. “It seems their idle utterances are based on
the premise that like all their earlier promises, the electorate in due
course will forget the present promises as well,” he said.

The politicians, however, are failing to recognize the frustration
that the people of Uttar Pradesh have started feeling as the gap widens
between the socio-economic levels in UP and the fast developing states
like Gujarat, AP, Tamil Nadu etc. The stark contrast on all
socio-economic parameters with their fellow citizens in emerging states
like Bihar is only adding insult to injury, Mr Agarwal said. 

FISME members in UP are watching with their fingers crossed if the
new government and the upcoming breed of some young and educated
leaders in different political parties will remain as distant to small
industries as their predecessors.

Perhaps the leaders in different political parties need to fast
appreciate that ‘demographic dividend’ in the coming decade can turn
into ‘demographic disaster’ when the millions of young people being
added to the workforce find themselves without jobs that can provide
them livelihoods.

There is just one choice and one choice alone before the country to
meet the grave challenge of employment and that is to make sure that
the manufacturing sector develops in adequate measure in line with the
recommendations of every economic forum including the Planning
Commission that finds manufacturing to be the fountain-head of new jobs
in the coming decades. If this is to happen, FISME feels the next
government in Uttar Pradesh has to actively engage with manufacturing
MSMEs on an ongoing basis.

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