Q12: Write a Note on: (a) Environment for the SME Sector (b) Infrastructure development and policy.

Ans: (a) Environment for the SME Sector

Meaning: Small and medium enterprises or small and medium-sized businesses are companies whose personnel numbers fall below certain limits. The abbreviation "SME" is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization.

Definition of Micro, Small & Medium Enterprises (MSMEs)

Small Scale Industrial Unit: An industrial undertaking in which the investment in fixed assets in plant & machinery, whether held on ownership terms, or on lease, or by hire purchase, does not exceed Rs. 100 lakhs as on 31-03-2001 is to be treated as a Small Scale Industrial Unit.

Table 1: Official Definition of Small Scale Industry in India as Modified from Time to Time

Year	Definition of SSI
1950	Capital Assets not exceeding Rs. 5 lacs
1958	Capital Investment of less than Rs. 5 lacs
1959	In capital investment, value of machinery to be taken at original price paid irrespective of it being new or old
1960	Gross value of fixed asset up to Rs. 5 lacs
1966	Up to Rs. 7.5 lacs
1975	Up to Rs. 10 lacs
1977	Up to Rs. 10 lacs
1980	Up to Rs. 20 lacs
1985	Up to Rs. 35 lacs
1991	Up to Rs. 60 lacs
1997	Up to Rs. 3 crores
1999	Up to Rs. 1 crore
2004	Up to Rs. 1 crore*

Source:

1.      SIDBI Report on SSI sector 2002.

2.      *Notification of Ministry of Small Scale Industry, Government of India.

Micro Small Medium Enterprises (MSME): MSME Sector consists of any enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership or undertaking or any other legal entity, by whatever name called, engaged in production of goods pertaining to any industry specified in the first schedule of Industries Development and Regulation Act, 1951 & other enterprises engaged in production and rendering services, subject to limiting factor of investment in plant and machinery and equipment respectively as noted below:

Classification	Manufacturing Enterprises	Service Enterprises
Micro	Rs. 2.5 million/ Rs. 25 lakh (US $ 50,00)	Rs. 1 million/ Rs. 10 lakh (US $ 20,00)
Small	Rs. 50 million/ Rs. 5 crore (US $ 1 million)	Rs. 20 million/ Rs. 2 crore (US $ 0.4 million)
Medium	Rs. 100 million/ Rs. 10 crores (US $ 2 million)	Rs. 50 million/ Rs. 5 crores (US $ 1 million)

Characteristics of SMEs Sector -These are as follows:

1.      Bring out of Individual initiatives and skills

2.      Greater operational flexibility

3.      Low cost of production

4.      High propensity to adopt technology

5.      High capacity to innovate export

6.      High employment orientation

7.      Reduction of regional imbalances

Significance of SMEs Sector-These are helpful in achievement of the following goals:

1.      Employment generation

2.      Balanced regional development

3.      Optimization of capital

4.      Mobilization of local resources

5.      Exchange Earnings

6.      Feeder to large industries

7.      Increased standard of living

8.      Less pressure of population on agriculture

9.      Equitable distribution of income

10.  Social advantage

Suggestions for improvements in SMEs Sector- Following are the suggestion plans that can be made to improve the performance of SMEs Sector

1.      Formulating Programme on Modern Business Tools

2.      Creating Awareness Programmes

3.      Think beyond conventional marketing

4.      Make use of internet

5.      Confirm to Technical Standard

6.     Planned Strategic Approach

Ans: (b) Infrastructure development and policy

Meaning: The basic physical systems of a business or nation. Transportation, communication, sewage, water and electric systems are all examples of infrastructure. These systems tend to be high-cost investments; however, they are vital to a country's economic development and prosperity. Infrastructure projects may be funded publicly, privately or through public-private partnerships.

Areas of Infrastructure Development:

1.     Physical Infrastructure: The term physical infrastructure is used to refer to a very wide array of systems and infrastructure that makes it possible for goods, services and people to be transferred from one geographical place to another. This term is also used in reference to systems that facilitate provision of services. These include:

i.                    Transport

ii.                  Power or Electricity

iii.                IT Industry in India

2.      Social Infrastructure: Social Infrastructure is a subset of the infrastructure sector and typically includes assets that accommodate social services. As set out in the table below, examples of Social Infrastructure Assets include schools, universities, hospitals, prisons and community housing. Social Infrastructure does not typically extend to the provision of social services, such as the provision of teachers at a school or custodial services at a prison.

Examples of Social Infrastructure Assets
Sector	Examples
Health	·         Medical facilities ·         Ancillary infrastructure (e.g. offices, car parks, training facilities)
Education	·         Schools (primary and secondary) ·         Tertiary facilities ·         Residential student accommodation
Housing	·         State or Council housing ·         Defence force housing
Civic and Utilities	·         Community & sports facilities ·         Local government facilities ·         Water and wastewater treatment
Transport	·         Bus stations ·         Park and rides ·         Availability-based roading (excluding demand-risk toll roads)
Corrections and Justice	·         Prisons ·         Court houses

Government Initiatives for Infrastructure Development: Infrastructure development is accorded high priority by the Government of India. It is amply clear that the present unmet and projected future demand for infrastructure services, arising from the needs of a growing economy, will require massive investments in the sector over the next few years. Private sector investment has been necessitated not just by budgetary considerations, but also because the Government has redefined its role from that of an owner of assets and the sole provider of services to that of ensuring that infrastructure services are actually delivered in a desirable manner. The Government of India has, therefore, taken a number of initiatives for the development of efficient infrastructure and towards creating an enabling environment for private participation and enhancing competition in the infrastructure

sector.

The infrastructure sector was one of the thrust areas in the union budget 2012-13. The investment in this sector during the twelfth five year plan will go up to Rs. 50 lakh crore, about half of which is expected from the private sector.

The Reserve Bank of India (RBI) has issued guidelines to allow banks and non-banking financial companies (NBFCs) to sponsor infrastructure debt funds (IDFs), to support long-term finance in infrastructure.