Question 1 · 10 marks · 162 words written
Opening · a definition
Missing middle refers to absence or weak presence of the middle sized firms in industrial ecosystem. Skewed nature
Body · points
- 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:
- Hinders the transition of small to large as middle support is lacking
- Skewed / asymmetrical economic power with large firms → obstruct new players
- 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
Close · a way forward
None written.