Contribution of MSMEs with Reference to Entrepreneurship Development and Employment Generation in North-East India: A Critical Evaluation

Kuntal Chakrabartty


This paper critically examines the contribution made by Micro Small and Medium Enterprises (MSME) with respect to Entrepreneurship development and employment generation in eight states of North East India (NEI). The new North East Industrial and Investment Promotion Policy have been introduced in 2007 with the aim of consolidating and developing this sector in NEI. So, we use the period 2006-07 to 2012-13 as the reference period of the study. We use Panel data regression model to study the contribution of this sector in North East Region. Our main finding is that MSME sector has made significant contribution in development of entrepreneurship among the youth population of North East States in India. Some states show more success due to their specific state policies like financial subsidy, SEZ etc. Next we focus on employment generation capacity of MSME sector. We derive employment elasticity of output to find out the employment generation capacity of this sector. We find that MSME sector has been able to create employment opportunity within the sector but it fails to absorb the semi-skilled and un-skilled migrated labour forces from agriculture and other sector in all eight states of NEI.

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