India faces a massive and rising challenge in order to create decent employment opportunities for its citizens, especially the youth. The unemployment rate was 7.20% in January and rural areas had a 9.7% unemployment rate while urban areas had 5.97%. The adoption of a pragmatic approach has become rather essential to tackle the increasing unemployment. A major concern currently is the NPAs in MSMEs. These MSMEs are responsible for employing millions and contributing over 28% of the GDP of the India economy.
Thus, closing down of these corporates gives a hard blow on unemployment. There has been an unexpected increase in NPA numbers due to the change in classification of NPAs. The current NPA norms need to be revised and employment generation schemes need to be adopted. In fact, the CSC (Common Service Centre) is promoting schemes implemented by the Ministry of MSME which aims to help independent and growing entrepreneurs.
Moreover, another scheme includes MSMEs inviting applications from start-ups, technocrats, students, and MSMEs from all over India. Those who get selected will be offered funds up to Rs. to Rs 15 lakh per approved idea. In addition, there is also ECL Finance Ltd which has signed up for priority sector lending to MSME customers. It will permit banks and NBFCs to co-lend to a broader set of enterprise owners. Most importantly, in the Union Budget 2020, our Finance Minister stated the importance of this sector and how it keeps the wheels of Indian economy moving, thereby allotting Rs 900 Crore debt-funding for MSMEs.
Thus, these floating schemes for new start-ups and ventures will help in employment generation. In addition to that, it becomes rather essential to also work for the revival of existing stressed units to maintain employment much similar to creating new opportunities.
New ventures have helped greatly in creating new employment opportunities. In 2019 alone, there were more than 1,300 start-ups helping India maintain its rank of being the third-largest start-up ecosystem in the world. These start-ups helped create an estimate of 60,000 direct jobs and 1.3-1.8 lakh indirect jobs.
While employment generation won’t come easy, a pragmatic approach can solve it to a great extent. Killing NPA accounts to promote new ventures for employment generation will consume more time and efforts. In fact, if we worked to enhance the MSME NPA that has already generated employment, would prove to be more fruitful. With that being, a lot of norm revision and policy adoption will become crucial to deal with the current crisis of rising unemployment.