Amid Massive Global Layoffs, Indian MSMEs Key Employment Generator In The Country

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New Delhi: The recent spate of layoffs across various industries has rocked the jobs sector. If reports on the prevailing jobs situation are to be believed, there have been more than half a million job cuts around the world since October 2022. However, these job cuts have predominantly been in white-collar companies whereas in India blue-collar jobs continue to register a contrasting picture.

India's Micro, Small, and Medium Enterprises (MSMEs) industry is the second-largest after China's. This industry produces more than 6,000 products, ranging from conventional to high-tech, and offers a broad range of services.

Experts suggest that micro-entrepreneurship may be one of the main catalysts behind such jobs remaining steady and, as a matter of fact, growing.

To gather insights into this trend and understand how micro-entrepreneurship is helping those at the bottom of the pyramid, Pawan Rai of Zee Media spoke with Muthoot Microfin CEO Sadaf Sayeed. Excerpts from the interview...

How MFIs & NBFCs have opened up micro-entrepreneurship avenues in India?

MFIs reach out to the remote rural sectors of India, where formal banking facilities are still not easily accessible for the communities from the bottom of the pyramid. In a vast country like India, where the majority of its population lives in rural areas, MFIs have helped in funding micro-enterprises and thus create jobs in the area.

After agriculture and artisan work, self-employment avenues create the most income-generating opportunities for the rural populace. Most MFIs do not just offer finance facilities to micro-enterprises, rather they offer skill training, business acumen training, and financial literacy to their customers, who are mostly women.

How micro-entrepreneurship is creating a blue-collar job market?

Creating Informal job opportunities is crucial to resolving the issue of unemployment to a certain point. The majority of micro-entrepreneurship belongs to this class and MFIs provide loans to start up or sustain the sector and support millions of people engaged.

Rural people get employment opportunities as MFIs by virtue of their loans and training empowers low-income borrowers to create self-employment opportunities through entrepreneurship. They in turn provide job opportunities to many more people in their vicinity.

India's women partnership is dismally low as compared to other countries. Can you elaborate on this further (in the context of empowering more women as micro-entrepreneurs?)

Women empowerment is a major issue in India as it directly relates to poverty reduction and the overall development of the rural population. Microfinance is considered a critical tool in addressing these issues.

Digital advancements have also helped MFIs to offer credit to women across rural India in a quick turnaround time with minimal processes. As a result, rural women are already making a big impact on India’s rural economic landscape.

In the times of Artificial Intelligence, how will the dynamics of microfinance change or will it change how micro-entrepreneurs would come up in the foreseeable future

Digital advancements have already changed the way MFIs used to operate. The sector has made tremendous strides in cent percent cashless disbursals, KYC management, and collections. In the near future, cashless collections would be at par with disbursals.

With the use of AI and other technologies, MFIs can reduce operating expenses as well as turnaround time for their key processes which can be utilised for conducting more productive activities.

As far as our customers are concerned, we have been training them to use technology and Apps to make cashless repayments, apply for new loans and even refer new customers. However, I don’t think these technologies will affect the two major features of microfinance which is social solidity and group dynamics.