Unregistered Firms / Bagedari Sector

• The ‘Bhagidari or Bagedari Sector’ indicates the unincorporated

enterprises.
It consists of following categories -
 Proprietorship firms
 Partnerships
 Professional (self-employed) firms
• This sector plays an important role in the Indian economy.
• Contributes to savings & national income.
• Share corporate sector is around 12-14% in NI
• Share of unincorporated sector more than 30% in NI.
 Bagedari in the Indian Economy
• Bagedari enterprises are dominant ; fastest growing sectors in the
Indian economy.
• Share in savings is more than 40% …. All pay taxes.
• Contribution is 35% to the National Income
• Enjoy more than 75% share in the service sectors -
 trade
 transport
 construction
 hotels
 restaurants
 services - doctors, lawyers, architects and accountants.
• However, compared to corporate & government sectors,
adequate focus is not given to these segments.
 Significance of Bagedari sector

• Most productive
• Efficient sector
• Employment generation.
• Savings & capital
formation.
• Reduction of poverty.
• Major wealth creator
• Provides income earning
opportunities.
 Start-ups
• The act or process of starting up a new business - Start-up.
• Initial or early stage of the life cycle of a business.
• More than 3,100 start-ups , present in India
• 3rd largest base in the world… 800+ start-up’s begin
business annually…
• By 2020, there would be around 11,500 start-ups
• Presently employ over 2,50,000 people.
• Bengaluru is the Start-up Hub of India …
 Start-ups
• A young company just beginning to develop…
• Usually small ; initially financed and operated by a
handful of founders or one individual.
• They offer a product or service that is not currently
being offered elsewhere in the market …..
• Founders believe what is being offered is an
inferior….. Hence the start up
• In the early stages, expenses tend to exceed their
revenues
• As they work on developing, testing and marketing
their idea….profits are generated.
 Start-ups
• They very often require financing….
• Start-ups may be funded by --
 Traditional small business loans
 Banks or credit unions
 Government-sponsored Small Business Administration loans
 Local banks
 Grants from non-profit organizations
 State governments.
• Start-ups may need both capital and advice
• Friends and family may also provide loans or gifts.
• A start-up that can prove its potential may be able to
attract venture capital financing…
• This in exchange for -
 Giving up some control
 Percentage of company ownership.
Start-up’s…..
 Small & medium Enterprises {SME}
• Back bone of Industrial Development.
• Ministry of MSME contributes nearly 8% in GDP,
40% in Manufacturing output & 45% in Exports.
• Provides largest share of employment after
agriculture
• Emerged as a dynamic & vibrant sector of
economy.
• SME’s -
 Widely dispersed across the country
 Produce a diverse range of products & services.
 Help in the growth of Nation
 They are the quintessential “Nursery” for
Entrepreneurship and Innovation
 The Emergence of MSME
• Basis - The Gandhian model
• Encouragement…. by MSME Act of 2006
• During pre liberalization (before 1991)
India adopted Industrial policy resolution 1948….
• This defined the role of state in industrial
development for the very first time…..
• At that time India accorded high priority to small
and medium enterprises….
• Despite numerous protection and policy measures
has remained mostly small & technologically
backward ….
• The scenario of small scale sector changed
with industrial policy of 1991
• Liberalization came in…..
• Post liberalization era (1991 to 2006) reflected
the growth of SSI’s
• In 1991, the growth rate of SSI was almost 3
times of the total industrial sector from 1992
to 1995
• However in 1995 the growth rate was slightly
lower but again it increased in 1996.
OVERVIEW OF TYPES
 MANUFACTURING ENTERPRISES
Micro Enterprises Small Enterprises Medium Enterprise

• Generally refers to a very • Generally refers to a small • Generally refers to a

small business employing business employing 50 business employing
10 people or less. persons or less. maximum to 250
• It is an enterprise in • It is an enterprise in which employees.
which investments in investments in plant & • It is an enterprise in
plant & machinery is machinery is between 25 which investment in
between 5 lakh to 25 lakh to 5 crores. plant & machinery is
lakh. • These enterprises work and between 5 crores to
• These enterprises work operate to earn a small 10 crores
and operate not by choice amount of profit. • These enterprises
but out of sheer necessity • Provide for self works and operates to
employment and earn a fair amount of
employment to others profits to increase
their standard of
living.
 CHARACTERISTICS OF MSME’s

• Low Cost of Production

• High flexibility
• Capacity to innovate
• Export orientation
• High generation of employment
• Reduction in regional imbalance.
 ROLE OF MSME’s IN INDIA

• Employment generation
• Production
• Export contribution
• Optimum Utilization of resources
• Increase in GDP
 PROBLEMS OF MSME’s

• Financial Problem - Credit

facility only up to 30%
• Raw material - Availability
and Allocation
• Technological problem -
Less Advertisement
• Managerial problems -
Professional help & Support
CONTRIBUTION & PERFORMANCE OF MSME’s

13 Million MSME’s
producing more
than 8000 Products

45 % Industrial
10 % Exports
production MSME’s

31 Million
Employment
Leading Banks provide loans to MSME’s
 EMPLOYMENT IN MSME’s SECTOR
EMPLOYMENT
732.24
800 695.40
695.38
626.34
700 595.66

600
500 number in lakh
400 person
300
200
100
0
2009-10 2010-11 2011-12 2012-13 2013-14

YEAR
 Employment generation in MSME

2009-10
MEDIUM

7%
24%

69%
Manufacture of Carpets & Rugs
 Large Scale Industry

• Large scale industries refers to industries with huge

infrastructure and manpower. EX. Steel, Textile ,
Automobiles.
• Information technology and telecom industry can
also be included in the large scale industrial sector.
• Indian economy is heavily depended on large scale
enterprise for its economic growth.
• LARGE-SCALE INDUSTRY,
1850 - 1950
• The term "large-scale
industry" refers to factories
that combine at least three
characteristics:
use of machinery
employment of wage labor
 application of regulatory
measures – {Factories Act or
Industrial Disputes Act.}
 Features & Importance

FEATURES OF LARGE SCALE ENTERPRISES-

• Strategic objective formulation.
• Strategic planning undertaken.
• Formalised policies, procedures and rules adopted.
• Organizational structure devised.
• Hierarchical management structure established.
IMPORTANCE OF LARGE SCALE ENTERPRISES-
• Improve in productivity.
• Import substitution.
• Export promotion.
 Essentials….
• Every country needs industries of heavy & basic industries for its
development
 Exploring of coal, iron and steel…..
 Exploring of oil and its purification….
 Heavy machineries, heavy electrical equipment, heavy chemicals,
ships and aero planes…...
• Theyhelp to develop -
 agriculture,
 transport,
 communication facilities
 and other industries.
• Development of large scale industries is almost essential for the
development of heavy and basic industries.
 Productivity

• Improvement in Productivity:
• In large scale industries work is distributed among the
labourers according to their efficiency which improves
the productivity.
• These industries also use huge modern capital which
raises productivity and reduces cost per head.
• Enables Import substitution and Export promotion.
• Large units are essential and important for all
economies
to grow….
 Advantages of Industries
• ????
 Advantages of Industries
• Industries help in generating the employment opportunities for the
people in majority of the nations after agriculture
• Employs the highest number of people and therefore it can be said to
be livelihood of many families.
• It is due to presence of many industries that we get to use array of
products like television, cloths, automobiles, furniture etc…, which
helps in making our life easier and improves the general standard of
living.
• A prospering industrial environment is good for the country because
government get income in the form of taxes from the industries, which
in turn is used by the government for the well being of the people.
• It makes the country independent because once country start
producing goods with the help of industrialization it does not have to
depend on other countries for its demand
• It can save its money by reducing the imports and it can even export its
produce leading to foreign exchange income which in turn makes the
country more prosperous.
Disadvantages of Industries
 Disadvantages of Industries
• The biggest disadvantage of industries is that it leads to increase in
pollution as many units emit poisonous gases which over the years have
turned out to be the major cause behind global warming.
• Industries leads to shift in the preference of people and they tend to prefer
working there because of more money and opportunities rather than in
agriculture sector and hence a gap is created because of this which in the
long term can lead to food shortages because of the lack of interest in
agriculture and allied activities.
• Since industries tend to attract many people it leads to problem
urbanization where many people from rural areas shift to urban areas
leading to urbanization problems like lack of housing, congestion, lack of
green space, health related problems and so on.
• It creates monopolies which ultimately lead to exploitation of consumers
of the country .
• Huge gap between the rich and poor is also attributed to the industries.
 Conclusion

• Industries are necessary for the well being of the people of every
country
• Industry together with agriculture helps the country in achieving its
economic growth and development.
• However as with everything else there are two sides of coin
• Has both merits & demerits….