Past experiences show that the answer lay in modernisation of Indian agriculture and step up development of Micro, Small and Medium Enterprises, which not only have the capacity to absorb surplus farm labour but as well as growing educated youth in rural areas. This also prevents migration of youth to cities in search of greener pasture.

Small and medium enterprises are concentrated in 8-10 sectors in India for which technology is available. Also they are labour intensive and hence create much needed jobs. Ten to 12 million people enter job market in the country every year. SMEs require less capital and every rupee spent creates four times more jobs than large capital intensive companies. The 8-10 sectors in which MSME is concentrated included textiles, construction and leather. Another area where one finds large number of MSMEs is ancillary industries. Public sector companies and some large private industries in backward areas had helped in setting up of ancillary industries.

But for SMEs growth in various clusters required infrastructure. In case of ancillary industries, the basic infrastructure is created by the large companies as in industrial townships like Bokaro, Bhillai, Sindri, Ranipet, Trichi. But there are SME clusters that have come up on their own as in Ludhiana, Moradbad, Tirupur and so on. These clusters have come up where there is already good road and rail network or close to ports as in Gujarat and other coastal states.

If Make in India campaign has to be successful, we need to give greater thrust to MSME, which accounted for 40 per cent of India's manufacturing and 45 per cent of the exports. So how do we go about? The golden quadrilateral and two diagonals connecting Kashmir to Kanyakumari and Silchar to Somnath also offered great potential to set up industrial clusters that could provide job opportunity to local people around those areas. The Delhi-Mumbai and Ludhiana-Kolkata rail freight corridors. Four more that are proposed connecting four metropolis in the country would also help in setting up SME clusters.

Along with Make in India and skill India campaign, it is worth exploring what has come to be known as diamond corridor, that is setting up industrial clusters dotting the Highways and the high speed rail freight corridors in the length and breadth of the country. The industrial clusters should be chosen in a manner that utilises local talents. Skill development programmes should be tailor-made to suit the requirement of the local area.

Funding may be a problem for SMEs, the bigger problem for SME is availability of skilled manpower. In fact SMEs have been constantly training raw hands, who in turn get absorbed in large companies after being trained. This results in SME entrepreneurs always being engaged in training and thereby getting very little time for management and production. So SMEs performance invariably is less than its potential. In cluster development there is yet another problem, that is poaching by fellow SMEs before they are absorbed by larger companies.

At the moment, Skill India programme should address the skilling problem of large industries. The SMEs do not have a voice and their recruitment is invariably localised and they therefore do not get the attention of the government that it deserves.

Along with industrial clusters, government should set up institutes for skill development for those dominant SME industries in those respective areas to ensure that there is a continuous flow iof skilled manpower to them.

As SMEs are less capital intensive and has much less gestation period, industrialisation of rural and backward regions could be rapid. Large industries like steel plants take years to set up whereas small and medium industries could be set up in 6-8 months in areas where basic infrastructure already existed. This developmental model is more relevant to Bihar and other backward states.

States like Tamil Nadu, which was once a poor state, has developed today because of concerted effort of the state government on socio-economic development. Labour-intensive SMEs played a critical role in this transformation. The Southern states have done well because of the improved education and health.

All that government should do is to link rural employment guarantee programmes to create necessary infrastructure to connect rural areas to nearby towns along the national highways and rail freight corridors so that SME clusters dot all over the country. States like West Bengal where land is scarce SMEs clusters provided the answer for inclusive growth. In Bihar, land may not be scarce but certainly jobs are scarce particularly in rural areas. SME clusters will provide quick and less expensive solution now that road and rail connectivity are improving in the state.

The Ludhiana-Kolkata rail freight corridor has proposed at least 7 such industrial corridors, particularly in Uttar Pradesh, Bihar, Jharkhand and West Bengal. This model could be replicated in other rail corridors and National Highways. More importantly economic development would become widespread, social indicators would improve and growth will be more inclusive. The countries which are strong in manufacturing are strong in SMEs. So India needs to re-invent Gandhian economics of developing cottage industries.

The forthcoming budget provided yet another opportunity to make economic growth more inclusive. The key is to push MSMEs through cluster development and make access to funds from formal banking sector much easier. As already indicated by Finance Minister Arun Jaitley MSMEs will be one of the priority areas in the budget. This augurs well for the economy and 2016 may become a turning point for MSME development in the face of several initiatives of the Modi government like Start up India, Digital India, Skill India and Make in India. All these initiatives offered tremendous opportunity for MSMEs. (IPA Service)