This is how Prime Minister Manmohan Singh described the role of MSMEs in the country's socio-economic life while addressing the MSMEs' national award function on August 28, 2009. He was shown in the picture, humbly greeting an old hunchbacked woman, Gudi Priya Das, who received the award for being the best khadi spinner from the North Eastern region.

The Prime Minister said that the MSMEs constituted a crucial sector of the economy and announced that the Centre would double the credit flow to this crucial sector over the next five years. He hoped that greater availability of credit would contribute to faster modernisation and expansion of these enterprises and help increase their productivity and competitiveness. More importantly, he said he had issued instructions “for constitution of a task force to look into the difficulties of MSMEs and recommend steps within the next three months.”

So far so good. It is, however, difficult to believe that the Prime Minister was ignorant of the fact that the MSME sector has been the worst affected by the economic crisis and slowdown and that the banks were diffident about advancing loans to this sector. Dearth of demand at home and abroad and lack of financial resources led to a large number of MSMEs' closure, rendering lakhs unemployed.

In this context, the PM's announcement at the MSMEs' national award function seems to be too little if not too late. Stimulus packages have been of little help to this sector because of the inaccessible delivery system, at least for the micro and small enterprises. Medium enterprises have received benefits. The Government's policy of liberalisation, privatisation and globalisation (LPG) has affected the banking system too, making it more corporate-centric.

P. Sainath of 'The Hindu' has given a graphic description of the impact of price rise and drought on the tiny and small businesses in the rural areas of Andhra Pradesh. They never gained from any stimulus package, he was told. His story covered the districts of Kurnool, Anantapur in Rayalaseema to Mahboobnagar and Nalgonda in Telengana. Village shops reported huge fall in turnover. “Whatever people earn goes on food and even that they buy much less,” Sainath was told. People engaged in the business of cattle-grazing, milk selling and running tiny hotels (dhabhas) - all said their turnover had so sharply declined that they were compelled to reduce their employees. The community of weavers was virtually devastated. Weavers have been suffering for years; they had no sales, no bank loans and their business has been taken over by dalals.

And this has happened in the rural areas of Andhra Pradesh, which should be the hub of the Congress-led UPA Government's policy implementation.

It also appears that the Union Labour Ministry, which is a party to the recommendations of the Tripartite Experts Group promoted by the Regional ILO network, to evolve social response to the economic slowdown in India, has not informed the Prime Minister about these recommendations. The Expert Group had formally forwarded these recommendations to the Labour Ministry for action in June 2009. If these had been forwarded to the PMO, it had not bothered about them.

The Tripartite Expert Group had made three specific recommendations pertaining to MSMEs. First, MSMEs require special attention and “should be given preferential treatment in respect of access to credit (by putting a quota on the financial institutions for MSME credit) and the rate of interest.” It said that the present situation of higher rate of interest on MSMEs, compared to large industries, should be reversed through a mandatory proactive role by financial institutions and be regularly monitored.

Secondly, the Expert Group wanted that the coverage of MSMEs by labour laws, irrespective of their workforce, should be incentivised. To start with, it said, extend enterprise coverage from 20 to 10 workers and ensure that implementation of labour laws is practicable and simplified.

The special point made is that MSMEs should get preferential treatment compared to the corporate sector in the matter of interest. Secondly, the labour laws should be implemented but these should be practicable and simplified. This is a matter for consideration for both the Government and the trade unions. Lastly, the Group also wanted that the employment impact and quality of work within MSMEs should be periodically monitored by the employers and trade unions jointly.

The setting up of a task force to look into the problems of MSMEs will be meaningful only if the approach of the task force is not tied to the apron strings of LPG which prefers giving attention to the corporate and export-oriented sectors. It is, therefore, the responsibility of the Tripartite Expert Group to immediately get in touch with the PM's expert group as and when it takes shape and submit its recommendations for the latter's information and interaction.

August 2009 has assumed importance apart from Independence Day observance, for yet another reason related to the organised labour in general and labour movement in particular. The central trade union organisations of all affiliations, including the INTUC, BMS, AITUC, HMS and CITU, have decided to jointly call an all-India convention on September 14, 2009 in Delhi to chalk out their future course of action.

The reason for this move of left, centre and right trade unions seems to be the realisation that the UPA Government is misusing the division in the labour movement to deny the workers even their genuine demands: the miserable plight of labour law implementation in the Special Economic Zones (SEZs) is a case in point. Ominously, the Government has been leaving the workers defenceless against the corporates' offensive during the ongoing economic crisis and slowdown. Illegal contractorisation and casualisation in the public and private sectors have become a norm rather than an exception. The abnormal rise in prices of essential items is making life hell for all sections of working people. (IPA Service)