Govt seeks comments on World Bank’s draft on social, environmental impact of its joint MSME programme

Ease of Doing Business for MSMEs: The MSME Ministry has invited comments from stakeholders on the draft Environmental and Social Systems Assessment (ESSA) by the World Bank required as part of their joint programme – Raising and Accelerating MSME Productivity (RAMP). The programme intended to boost the productivity and competitiveness of Indian MSMEs is designed based on the UK Sinha led Reserve Bank of India’s Expert Committee report of June last year. The report had recommended various regulatory, financial, and implementation reforms along with “firm-level access reforms to provide targeted interventions to MSMEs across recognized challenge areas,” the MSME Ministry said on Tuesday. The programme is currently in an advanced stage of formulation and finalization, the ministry added, while the draft was released on November 11, 2020.

The ESSA is required to verify compliances to environmental and social standards by the last mile enterprises covered under the various scheme of the MSME Ministry. The key findings of ESSA in terms of environmental standards noted that while the centre and state governments have well-developed environment legislations, the implementation setup to address environmental challenges of RAMP needs to be further strengthened. Further, non-compliance with the environmental permits, poor monitoring and enforcement by government authorities, and improper technology selection may affect the environment negatively, etc.

The likely environmental risks mentioned included contamination of water bodies due to polluting industrial wastewater discharges, occupational health, and safety practices of MSME workers, community health and safety risks arising from poor management of MSME emissions such as waste disposal, air emissions, etc. On the other hand, with respect to social standards, the findings claimed that there is limited awareness among enterprises on occupational health safety issues. It also said that state-level departments do not have a consolidated database disaggregated by social and gender status that would otherwise help in building targeted training and capacity building initiatives to reach SC/ST and women entrepreneurs.

Also read: Unacademy’s valuation soars to $2 billion with latest investment from Tiger Global, Dragoneer

The government has sought feedback to be submitted on or before November 30, 2020, through email. The five-year RAMP programme is a $500 million operation to support the government towards enabling growth for MSMEs with a counterpart funding of $500 million to be contributed by the government itself. “Indian firms are small and do not grow over time. The most common firm size in India is one worker and around 99 percent of the firms have less than 10 workers. These skewed patterns of size and growth impose huge productivity costs,” the ESSA report by World Bank noted. This is worrying since long-term growth and job creation are driven by productivity growth, it added. The support under the RAMP programme would target the identified market failures and institutional capacity limitations that hinder MSMEs’ growth.