Editorial – May 2023

Digitization of MSMEs, an important project of the government to raise the business performance of the sector, is being damaged by the machinations of the minister, Narayan Rane to award contracts at higher rates to his preferred vendor. The project, which has also entailed consistent arm-twisting of diligent and honest officers, has been delayed by three years. Now a procurement system is being put in place whereby competition will be limited and weightages are so designed that government will be forced to shell out more money to private contractors. Our cover story details all the wrongdoings associated with this project.

Across India, there are crores of unorganised, not so tech-savvy MSMEs. The government wants that they should see the advantage of digitization of their businesses. Many states are also running promotional programmes for raising the MSME sector to its full potential. The One District One Product (ODOP) model of the UP government is a good example. Digitization is expected to ramp up the sales of such producers. The union government also offers a subsidy to the MSME for going digital. MSMEs have to register themselves to avail the Digital MSME scheme and become a member. The membership fee comes bundled with a subsidy: Micro (80 pc), Small (60 pc), Medium (50 pc). There is an additional subsidy of 10 pc for the MSMEs owned by women entrepreneurs, SC-ST owned MSMEs, and in areas of north east region (NER), Himalayan region, left wing extremism (LWE) areas, island territories, and aspirational districts. MSMEs have the option of varying level of membership as per their need.

To operationalise this scheme, the ministry of MSME has to establish the IT infrastructure. Under Mr Rane, it has become a cesspool. This project should be taken out of MSME ministry and handed over to Ministry of Electronics & Information Technology (MeitY). AMC, training and publicity cost head controlled by the MSME ministry for the project should also be shifted to MeitY. Only the mandate of subsidy contribution to annual membership for each MSME registered under the scheme should be left with the MSME ministry.