society at large. it is essential that these issues are given due attention of policy makers to encourage and promote the growth of micro enterprises. the prime minister ’ s task force ( tka nair 2010 ) laid emphasis on the micro enterprise sector which generates opportunities for self - employment and stipulated that 60 per cent of mse advances should go to the micro enterprises. msmes make a significant contribution in the country ’ s gdp, manufacturing output, exports and employment generation. msmes contribute 8 per cent of the country ’ s gdp, 45 per cent of the manufactured output and 40 per cent of our exports. the labour and capital ratio in msmes and the overall growth in the msmes is much higher than in the larger industries. msmes are better dispersed. in view of these factors, msmes are important for achieving national objectives of growth with equity and inclusion. as per the quick estimates of 4th all - india census of msmes, the number of enterprises is estimated to be about 26 million and these provide employment to an estimated 60 million persons. of the 26 million msmes, only 1. 5 million are in the registered segment while the remaining 24. 5 million ( 94 % ) are in the unregistered segment. the statewise distribution of msmes shows that more than 55 % of these enterprises are in 6 states, namely, uttar pradesh, maharashtra, tamil nadu, west bengal, andhra pradesh and karnataka. fewer msmes are owned by women, the unorganized sector, in which enterprises are typically established through own funds or funds obtained through noninstitutional sources, they lack managerial bandwidth, do not have established channels for marketing and are centred around a single traditional technology. more than 94 per cent of msmes are unregistered, with a large number established in the informal or unorganized sector. the national commission for enterprises in the unorganised sector ( nceus ) defines unorganized sector as enterprise employing less than 10 workers. it has estimated such enterprises at 58 million with employment generated of 104 million persons. shortage of capital, particularly working capital, is the major problem faced by the enterprises in the unorganized sector. further, the field studies undertaken by nceus indicate that seasonality of markets is another hassle. in addition to the growth potential of the sector and its critical role in the manufacturing and value chains, the heterogeneity and the unorganized nature of the indian msmes are important aspects that need to be

deepali pant joshi : enabling urban microfinance keynote address by dr deepali pant joshi, executive director of the reserve bank of india, at the conference on “ the challenges of enabling urban finance ”, organised by minorities development department, government of maharashtra and mavim the state womens ’ development corporation, mumbai, 16 september 2013. * * * at the outset, let me congratulate additional secretary for the theme of this conference “ enabling urban microfinance ” which is truly appropriate as it chooses to bring to centre stage issues of urban poverty. the scale of urban poverty in india is staggering. current estimates suggest that 100 million poor people live in urban settlements comprising 40 % of the urban poor. these numbers are expected to rise. the prediction is that the total urban population of india will increase from 26 % of total population to over 36 % – 50 % over the next twenty - five years. the number of urban poor would increase to 200 – 300 million. until and unless cities are able to meet the growing needs of the expanding population, any advantages that economic opportunities might present the urban poor are likely to be outweighed by these factors for policy makers. therefore it means that the characteristics of urban development must be understood and included in initiatives to reduce overall poverty in india. the general consensus is that poverty can be most effectively addressed through economic development for which rapid urban development is a key driver. the national institute of urban affairs estimates that urban india currently contributes more than 50 % of the country ’ s gdp whilst accommodating less than a third of its population and this contribution is likely to increase to 60 %. the manufacturing and services sectors that are the most dynamic constituents of the indian economy are predominantly urban. in addition, with agriculture exempt from income tax, the fiscal base of the economy is also disproportionately reliant on the urban economy as the proportion of people thronging urban areas continues to rise. the opportunities for poorer people to tap this growing economic base are enormous. in the wake of the often unplanned and unregulated urbanization, the urban poor face physical, environmental, social and psychological problems. these impose a heavy burden of disease and inequity on the urban poor. they are compelled to live in squalid and untenable settlements and suffer the consequence of environmental degradation, resulting in ill - health, disability and loss of earnings. as cities grow, the pressure on existing services and associated