At last, the wrongful propaganda has been busted by the largest and most reliable ‘Job Creation’ survey by CII.
The Confederation of Indian Industries (CII)’s large survey of ~1.05Lac MSMEs reveal the most interesting and the most reliable evidence on the extent of job creation in India in the past 4 years. What makes it interesting is the fact that CII’s findings can be corroborated by various reform implementation timelines and their likely logical impact on the ground.
Part I – Summary of CII’s findings
1) CII conducted a large independent survey of 1,05,347 MSME firms during the past few weeks to gauge the extent of job creation in India during the past 4 years. Surveyed firms include both the formal and the informal sector, and 85% of those surveyed were micro firms (turnover <Rs5 crore and normally employs < 25-50 people).
2) The survey has concluded that India created ~6.0 crore net jobs, or a ~13.9% net job growth in the past 4 years (2014-15 to 2017-18). This is significantly higher than ~2.5% job growth during last 4 years of the UPA Govt. (as derived by CII based on national sample surveys). One of the key reason for higher job growth has been attributed by MSMEs to various reform measures and support initiatives taken by the government for the betterment of MSMEs.
3) ~73% of new jobs during the past 4 years have been created by micro enterprises (with lower share of ~50-55% in the total stock of employees of all the surveyed firms). This indicates micro enterprises grew at much faster rate compared to larger firms (and there is a reason as to why, read in part 2).
4) Importantly, the survey indicates significant uptick in the sentiments on the ground, as these MSMEs expect the job growth in their firms to be a whopping 34.9% in the next 3 years (implying ~15 crore new jobs on all India level) on the back of:
a) various reform measures & support initiatives now reflecting on the ground
b) stabilization of structural reforms like GST etc.
Part II – What has driven higher job growth in past 4 years, especially for MSME sector
1) One of the key outcomes of GST implementation and its stabilization has been that it has created a level playing field among all firms. Now there is no tax arbitrage on account of size, location or tax evasion etc. Also, simplification of tax structure (one single tax, composite scheme) and simpler returns & filings have enabled micro enterprises to flourish.
2) Significant reduction in corruption resulting in preference to merit, has also contributed majorly to level playing field for MSMEs.
3) Mudra Scheme enabling loans to micro enterprises leading to better access to capital (15.6 crore loans worth Rs. 7.2 Lakh Crore)
(Points 1, 2 & 3 of part II, clearly highlight as to why micro enterprises have had a higher share in job creation in past few years).
4) Govt. of India initiated various reforms and support measures for MSMEs during past 5 years, which include:
- Interest subvention for all GST registered MSMEs (as per the CII survey, a large number of MSMEs have appreciated this scheme)
- Shram Suvidha, a portal to facilitate inspections and submission of returns
- Trade Receivables e-Discounting System (TReDS), a portal for bill discounting
- Lower income tax rate of 25% for companies with turnover < Rs250 crore
- Collateral free loans upto Rs. 1 crore to MSMEs
5) Apart from aforementioned reasons, a major driver for job growth has also been the NDA government’s relentless focus on improving business environment through:
- Large scale infrastructure creation
- Minimum Government Maximum Governance, resulting in improved business and investor confidence. This clearly reflects in India’s quantum jump in World Bank’s Ease of doing Business Index, the Moody’s Rating upgrade after 14 years, and improvement across various other parameters/indices.
All the above clearly corroborates CII survey’s finding of much higher job creation in the past 4 years vs. the UPA years.
Part III – Future Growth & Job Creation
As highlighted in Part I, the CII survey clearly indicates a further quantum jump in job creation in short to medium term. In this context, it is important to note that in the last 5 years, on all fronts, a number of structural reforms and large scale programs have been implemented. This has put India on the threshold of much higher GDP growth and job creation, and the same is being corroborated by the CII survey findings.