Explain the concept of the "Missing Middle" in India's industrial ecosystem. How does it affect economic growth and employment generation?

• Bar chart showing Proportion of firms on Y axis vs Type of firms on X axis
  • MSE: tallest bar on the left
  • Middle: very small bar
  • Large Firms: small bar on the right
  • Arrow pointing from the gap between MSE and Large firms to 'Missing middle'

Skewed nature → Nifty 50 has 80% of market cap → Small industries (MSME) → >80% of firms

Effect on Economic growth:

1. Hinders the transition of small to large as middle support is lacking
2. Skewed / asymmetrical economic power with large firms → obstruct new players
3. Inequality in attention → disincentive small firm to take risk

④ leads to income disparity → affect demand. eg 1% hold 40% of wealth (Oxfam).

Effect on employment generation

① Informalisation → as small firms tend to hire on contract basis

② Poor skill transmission and upgradation affects human resource

③ The large firms tend to adopt automation technology eg automobile sector

④ Rise of gig economy due to virtual monopoly by large firms

Way forward →

• Address 'jobless growth'
• Balanced regional development
• Formalisation of firms and promotion to grow
• MUDRA
• PLI