India launches index for micro and small enterprises

On February 3rd, the Union Minister for Finance, Shri Arun Jaitley, launched, CriSidEx, India’s first sentiment index for micro and small enterprises (MSEs)

February 3, 2018

The index has been developed jointly by CRISIL, a global analytics firm, and Small Industries Development Bank of India (SIDBI), an independent support body

CriSidEx is an index based on a diffusion index of eight parameters and measures MSE business sentiment on a scale of 0 (extremely negative) to 200 (extremely positive)

CriSidEx will have two indices, one for the “survey quarter” and another for the “next quarter” once a trend emerges after few rounds of the survey, providing independent time series data

At the launch, Mr Jaitley said that the health of the Micro Small and Medium Enterprises (MSME) sector was extremely vital for the growth of national economy

On February 3rd, the Union Minister for Finance, Shri Arun Jaitley, launched, CriSidEx, India’s first sentiment index for micro and small enterprises (MSEs). The index has been developed jointly by CRISIL, a global analytics firm, and Small Industries Development Bank of India (SIDBI), an independent support body. CriSidEx is a composite index based on a diffusion index of eight parameters and measures MSE business sentiment on a scale of 0 (extremely negative) to 200 (extremely positive). Ahead of the launch, parametric feedback was captured through a survey of 1,100 MSEs over November–December. Resultantly, CriSidEx will have two indices, one for the “survey quarter” and another for the “next quarter” once a trend emerges after few rounds of the survey, providing independent time series data.

MSE have been steadily increasing their contribution to the national economy and gathering global clientele. These enterprises are classified broadly under two classes: Manufacturing Enterprises–those engaged in the production and preparation of goods pertaining to any industry as decided by regulations and are defined in terms of investment in plant and machinery; Service Enterprises–those engaged in rendering of services and are defined in terms of investment in equipment. Under manufacturing, investment for micro enterprises does not exceed US$39,000, while that in small outfits should be between US$39,000 and US$780,000. Similarity, in the services sector, investment for micro enterprises is within US$15,600 and that for small outfits range between US$15,600 and US$312,000.

CriSidEx’s readings will flag potential headwinds and changes in production cycles and thus help improve market efficiencies. Furthermore, by capturing the sentiment of exporters and importers, the index will offer actionable indicators on foreign trade. At the launch of the index, Mr Jaitley said that the health of the Micro Small and Medium Enterprises (MSME) sector was extremely vital to the national economy. A number of initiatives undertaken by the Central Government over the past two years have helped fasten the integration of MSME sector into formal economy.  This is crucial as going ahead, the MSME sector is anticipated to generate the majority of new jobs. The sector is also important as it is a cradle of entrepreneurial and innovation skills in India. This has led to rising investment interests in the sector.