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Entrepreneurship Skill Development Programme (ESDP) – Policy Update 2021 – IMPRI Impact and Policy Research Institute

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Entrepreneurship Skill Development Programme (ESDP) – Policy Update 2021 - IMPRI Impact and Policy Research Institute

Khushi Somani

The Ministry of Micro Small and Medium Enterprises (MSME) launched the entrepreneurship and Skill Development Programme (ESDP), to build entrepreneurial skills and abilities in existing and potential entrepreneurs in India. It is one of the many programs introduced by the M/o MSME that aims to upscale the capacity of young people to take up risks and build successful enterprises across the nation. There are multiple activities under the scheme organized in Industrial Training Institutes (ITIs), Polytechnics, and other technical institutions/business schools, where talent is available to motivate youngsters towards self-employment. 

A critical element under the “Development of MSMEs,” the ESDP scheme was amended in 2019 by the ministry in accordance with the dynamic landscape of Entrepreneurship and MSME in India. The up-scaled ESDP is characterized by the Enterprise Facilitation Centre (EFC), aiming to enhance the program’s outreach and strengthen the enterprise facilitation process.

Objectives

The program’s primary objective is to motivate individuals from lower and disadvantaged sections of society such as SC/ST, women, disabled individuals, below the poverty line (BPL) individuals, differently-abled, etc., to pursue self-employment as one of the career options. In its essence, the program aims to promote the establishment of new enterprises, inculcate capacity building of existing MSMEs, and foster an environment of entrepreneurship in India.  

Nature of Assistance

ESDP scheme is carried out through the following activities: 

  • Industrial Motivation Campaigns (IMCs): A two-day program, it aims to motivate traditional and nontraditional individuals to take up entrepreneurship as a career path.
  • Entrepreneurship Awareness Programmes (EAPs): Lasting for two weeks, EAPs aim to nurture youth’s talent by informing them and spreading awareness of various industrial activities needed for establishing enterprises.
  • Entrepreneurship-cum-Skill Development Programme (E-SDP): It aims to enhance the skills of existing and potential entrepreneurs as well as workers. Additionally, the program aims to teach new workers and entrepreneurs various skills. This program is carried out for six weeks.
  • Management Development Programmes (MDPs):  The objective of management practice systems is to improve the decision-making capabilities of entrepreneurs and achieve higher productivity and profitability. The prgram is conducted for a short duration, i.e. one week, and is designed in accordance with the needs of different industries.

It should be noted that under this scheme, 40% of the targeted beneficiaries of EAPs and E-SDPs have to be Women. Additionally, an individual has to be over 18 to participate in this scheme, and the various implementing agencies decide the qualification and fees structure of the participants.

Functioning

The activities under the ESDP scheme are conducted with the assistance of various Implementing Agencies (IAs) like Office of DC (MSME) and its field offices like MSME development institutes (MSME-DIs), field organizations of M/o MSME, etc. 

However, these IAs and institutions are present only in capital cities and a few other districts making the program’s outreach limited. Hence in light of this, ESDP was amended in 2019, and the ministry put Enterprise facilitation centers (EFC) in place to expand the program’s outreach. EFCs can be set up by IAs and have two verticals, namely Enterprise facilitation vertical and Skill development vertical. These components aim to ensure that the needs and aspirations of youth are carefully addressed.

Performance

According to the data published by the DC (MSME), the ESDP scheme has successfully conducted 8,197 programs. In addition to this, the ministry has trained 2,81,312 individuals since the inception of this scheme. Hence, there has been a 6.56% and 18% increase in programs conducted and individuals trained respectively since 2020. Under this program, the Government has incurred an expenditure of 34 crores and generated a revenue of 3 crores. 

Assessment

While the beneficiaries of the ESDP scheme have increased over the past, one cannot conclude it as a successful program until on-ground outcomes are not achieved. An accurate assessment of ESDP requires analyzing the number of enterprises that emerge from this program.

“While the steps taken by the Government are welcome, one has to look at the on-ground impact of the scheme. There doesn’t seem to be much currently. It is not about the trainees entering the program but enterprises being set up by them after the program.”

~ Vishwanath, Co-chairman, Industry Committee, Ph.D. Chamber of Commerce and Industry

According to IBEF, the Udyam registration portal registered more than 1 million MSMEs until November 2020. However, out of all the registrations, over 93% were micro-enterprises, indicating the skewed nature of the entrepreneurial ecosystem. Moreover, only 7% SC and 2% ST owned enterprises as per annual report released by the M/o MSME. 

Adding to the gravity of the situation, while the scheme aims to encourage people belonging to backward sections, especially women, to take up entrepreneurship, women’s participation in this field remains minimal. As per the report titled “Moving the Needle” published by the NITI Aayog in march 2021, of the 58.2 million MSMEs functioning in India, only 14% or 8.05 million were owned by women. Moreover, women acknowledged enterprises were further skewed to smaller businesses, with over 98% of companies falling under the category of micro-enterprise.

Challenges Facing Entrepreneurship and Skill Development

The ESDP scheme is one of the many skill development programs implemented by the Government to consolidate entrepreneurship in the country and encourage the establishment of MSMEs. However, various challenges are confronting the capacity building of MSMEs.

  • Infrastructural Bottlenecks: As mentioned above, most of the enterprises under the MSME fall into the category of Microenterprises. There is a need for better infrastructure for the transition from micro to small or medium enterprise, including an affordable place for carrying out the business, good power, water connection, etc.
  • Access to Technology: Low technology level extensively constrains the reach of MSMEs in the global market. Technological obsolescence is a significant problem affecting the capacity building of the MSME sector. 
  • Weak industry-academia interface:  Owing to the weak link between industries and academic institutions in the country, the ability of students to get into entrepreneurship is adversely impacted. 
  • Scale and Cost: Regardless of the financial assistance provided by the ministry for the sustainability of various schemes, expanding these measures and broadening the reach of programs remains a matter of concern.  
  • Demand and Supply mismatch: There prevails a significant difference in the supply and demand of skilled labor. It is imperative to attune skill development programs with the potential globally demanded skills

Way Forward

The MSME sector is one of the main sectors contributing to the growth of the Indian economy. Over the past years, the Government has undertaken various initiatives and skills to increase the number of MSMEs in the country and bolster entrepreneurship. ESDP, one of the many schemes under the M/o MSME, has unequivocally contributed to skill development in the country. However, a closer analysis of the schemes proves that most of the ESDP beneficiaries hail from the general category, and merely 10% belong to the SC/ST backward. Additionally, women entrepreneurs are still very minimal, and their businesses are skewed to micro-enterprises. In light of this, considerable effort must be initiated to encourage entrepreneurship among backward and disadvantaged classes of society. 

Owing to the pandemic, activities under the ESDP scheme came to a halt, and the entrepreneurship ecosystem was quite dysfunctional. As the economy is reviving, the Government must encourage skill development attuned with global demand and reinvigorate the MSME sector. 

References

https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/MSMES24062019465CF8CB30594AC29A7A010E8A2A034C.PDF

https://msme.gov.in/sites/default/files/Up-Scaled-ESDP-Guidelines.pdf

https://msme.gov.in/sites/default/files/MSME-ANNUAL-REPORT-ENGLISH%202020-21.pdf

https://www.niti.gov.in/sites/default/files/2021-03/MovingTheNeedle_08032021-compressed.pdf

https://www.ibef.org/industry/msme.aspx

https://msmedi.dcmsme.gov.in/#  

https://www.financialexpress.com/industry/sme/msme-skil-esdp-modi-govts-entrepreneurship-development-scheme-sees-nearly-400-jump-in-trainees-in-2020/2155444/

About the Author

Khushi Somani is a Research Intern at IMPRI. She is currently pursuing her Bachelor’s degree in Economics from Symbiosis School of Economics, Pune.

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