 Hello friends, my name is Dilip Pratap Singh Shakavath, I have secured all Indirax 72 in civil service examination 2018 and today I am here to discuss the chapter number 3 volume 1 of economic survey 2018-19 and this chapter is nourishing dwarfs to become giants, reorienting policies for MSME growth. MSME stands for micro, medium and small enterprises and hence a focus on this sector has been envisaged because in India for a very long period of time we are seeing jobless growth as a very chronic problem of Indian economy and the unemployment levels according to certain surveys also increased to record level and hence this chapter has been brought out in economic survey which will provide some solutions for job creation in India. Now in the abstract there are certain facts which have been provided in the economic survey which are very important for a better understanding of the MSME sector. The most important fact is dwarfs that is the firms which with less than 100 workers despite being more than 10 years old account for more than half of the organized firms in manufacturing by number but contribute only 14% to employment and only an only 8% to productivity. So their number is around more than 50% but the contribution towards employment is only 14% and towards productivity is only 8%. So this is a very sorry scenario in the terms of MSME sector and really things are not doing that well. We have certain schemes like the MSME Development Act and then we have this Pradhan Mantri Mudra Yojana also which are envisaged to reinforce, reinvigorate the sector but definitely we are having some problems in the structural domain. Now as we have discussed the data which was given that contribution towards productivity and the contributions towards employment generation of the MSME sector is very low then what are the reasons why this thing is happening. Now the most important reason for this is the reservation policy for the small scale industries in which there are certain reservations which are made the policy benefits are still given through MSMEs even after attaining 10 years of age and hence they become unproductive. Hence they have no incentive to move out from that reservation policy and they become stagnant over a period of time. Hence this impedes job creation and as well as productivity. So this is one reason and then the effect of size as compared to the effect of age is also very important as compared to the small firms it is the young firms that contribute significantly to the employment and value addition. Now young firms which are the start-ups basically the infant firms they play the most important role as far as employment generation is concerned and the scope of their growth is also very high because it is a new organization the people in the organization are also full of energy and hence they have a stake in the production and the success of the organization. So this is the area where we are missing out we are focusing on those firms which are more than 10 years old have become stagnant for job creation rather than focusing on the infants the start-ups which are coming up in a great number which have a potential to provide a lot of employment and to also contribute towards productivity. So this is the miss focused approach which you are having in the MSME sector. Now in the next section of this chapter the role of policy in fostering dwarfism is also very important because the impact of labour law regulation has been discussed in detail in this chapter of the economic survey that the labour laws play a very important role in an organization's success in an organization's productivity because where the labour roles are very very rigid the organizations face too many difficulties for making their labour more effective for making the human resource more optimized and hence the face challenges like people are having fixed job hours they do not have flexibility the non-performing workers are also not relieved on time and hence it becomes a burden of the organization a drag on the organization and hence it comes out of productivity and it hence it becomes stagnant. So this is a very sorry scenario in this sector as well and a case of Rajasthan has been discussed because recently in Rajasthan very good number of reforms in labour laws has been done and hence it brought out a very positive message to the market also the industries also took this message very positively and hence it was able to retrieve workers which become unproductive and it also incentivized the workers to really stay productive and hence give more production to the organization which will turn into profits which will again turn into investments. So in Rajasthan the productivity has increased as compared to other states where the labour laws have not been changed it has not been reformed and hence the data is that states such as Uttar Pradesh and Gujarat are 25.4 percent more productive than their counterparts in states like West Bengal or Chhattisgarh that continue to have labour rigidities. In Uttar Pradesh and Gujarat also labour laws were reformed and hence the productivity increased as compared to the states where labour rigidity is still there. Now there are certain policies which are mentioned in the economic survey which promote the small scale reservation. I will list out the policies which are mentioned priority sector lending, credit guarantee fund scheme, purchase preference policy, price preference policy, benefits in tendering, raw material assistance scheme for of national small industries cooperation, marketing assistance scheme, GST composition scheme, exemption under the central excise law and the final being the small scale industries reservation policy which was introduced in 1967. So these are the policy impetus which has been provided to the small scale industries in India. Now the key takeaways from our discussion in the previous part of this chapter is that we are providing such policy incentives to these firms for a long period of time. Now the conclusion is that these are mistargeted, these firms do not have an incentive to produce more they have become stagnant and hence we are expecting a desired outcome from the wrong type of firms and hence the solution which is provided by the economic survey are incentivising infant firms rather than small firms. Because infant firms are new, they are full of energy, their human resource is completely energised and hence they are in a position to grow more and more and hence they are the best targets to create more and more jobs, to create productivity, increase the production and increase the profits of the enterprises as well. The second solution which is provided by the economic survey is to reorient the priority sector lending program of the RBI of the banks. Under the MSMEs PSL targets it is necessary to prioritise start-ups and infants. This focus has to be made because these are the firms which have the most maximum amount of incentive to really produce more, to create more jobs because they have, they are ambitious, they are headed by young people and hence they can make the organisation productive and which will again turn people into a positive spiral of employment, then savings, then investment and then growth. So this is very important and the sectors which are mentioned in which focus has to be there are some of the elastic sectors in which if we invest more the jobs come out automatically. For example, rubber and plastic products, electrical and optical equipment, textile products, leather and footwear. So these are the sectors which are very, very elastic in which due to policy impetus we will see a very huge change in the dynamics of the organisation and hence more job can be created due to increase in investment. The next solution provided by the economic survey is to set a sunset clause for the incentives which are given to the small scale industries. So this is again a very important solution to the problem which we have discussed earlier. Then focus on service sectors with high spillover effect, for example tourism. Now if we focus on the tourism sector it involves many areas, for example transportation is covered, then hotel industry is covered, food industry is covered. So these are the sectors which have many spillover benefits in other sectors as well which can help resolve the problem in India that is jobless growth. So in this chapter basically a holistic solution has been envisaged for a jobless growth in India and the flag bearers of such kind of transition from a jobless growth to a job led growth in India will be the small scale industries especially the start-ups and the infant enterprises which can play a leadership role in this area to create more jobs and help achieve the target of a $5 trillion economy by 2024-25. So this was my analysis of the chapter 3 of the economic survey volume 1. For the reference of the candidates the link to the PDF has been provided in the description box. So after watching the video a candidate can have a look through the PDF and understand the salient important features of the economic survey. Thank you. Subscribe to our channel and click on the bell icon to get latest updates on upcoming videos.