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Aatmanirbhar Bharat & Small Entrepreneurs

  • IASbaba
  • December 6, 2020
  • 0
UPSC Articles
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ECONOMY/ GOVERNANCE

Topic: General Studies 3,2:

  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Aatmanirbhar Bharat & Small Entrepreneurs

Manufacturing

  • The slow growth of India’s manufacturing sector has been a long-standing concern for policymakers. 
  • India’s manufacturing sector generates less than 20% of the national output, and it has been overshadowed by China.

Aatmanirbhar Bharat

  • It is aimed at addressing this deficiency. More restrictive trade will enable entrepreneurs to tap into India’s large domestic market rather than relying just on exports. 
  • The shift towards the domestic market has been fueled by the size of the domestic market, the rise of the middle-class, and India’s young demographics.
  • Restrictive trade regime
  • India’s expansion in the manufacturing sector came primarily from the expansion of small entrepreneurs, who account for 99% of establishments and create 80% of jobs in the manufacturing sector.
  • Small entrepreneurs expanded in the tradable sector but contracted in the non-tradable sector.
  • The shift towards a more restrictive trade regime may benefit a few large conglomerates, but it will harm small entrepreneurs, and slow down the pace of job creation.
  • The entire net job growth in the manufacturing sector during the last three decades came primarily from small enterprises in the tradable sector.
  • This trend in the expansion of jobs and small enterprises in the manufacturing sector was not observed in the non-tradable sector. 

Trade Liberalisation

  • The expansion of small entrepreneurs in the tradable sector and contraction in the non-tradable sector shows that India’s trade alkanization has primarily benefitted small entrepreneurs, who became an integral part of the global supply chains.
  • Trade alkanization played a key role in enabling small enterprises to become an integral part of the global supply chains.
  • Trade alkanization and the rapid pace of alkanizatio boosted India’s size of the informal tradable sector.

Informal Sector

  • Young entrepreneurs in the informal sector have created more jobs compared to the large established conglomerates in the formal sector. 
  • The informal sector has remained the key driver of poverty reduction, compared to publicly funded poverty programmes.
  • Small entrepreneurs conform much more closely to the overall contours of India’s economic geography than large conglomerates. 
  • Not all jobs in the informal economy yield paltry incomes. Many self-employed earn more than unskilled or low-skilled workers in the formal economy.
  • There are huge horizontal and vertical linkages between large and small firms. Small firms are an important supplier of inputs to large firms.

Friendly Trade Regime

  • India’s young demographics, and limited employment generated by large industrial conglomerates, has increased the importance of a friendly trade regime for small entrepreneurs who create a majority of jobs in India. 
  • Trade flexibility and global integration has enabled millions of more women to find jobs, and better manage work-life balance.
  • The reversal in the trade regime may break the friendship that currently exists between large and small enterprises and informal and formal sectors.

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