Data Insight: Relationship Between Number of MSMEs and Employment Generated in Telangana Region

Research Questions:

1. Is there any relationship between No.of MSME Units and Employment Generated in Telangana
2. Is there any Relationship between Amounts Invested and Employment Generated in Telangana
3. Is there any Impact/Effect of No. of MSME Units and Amounts Invested on Employment Generated by the MSMEs?

Consider the Following Data Table: comprises Number of MSMEs started, Amount Invested and Employment Generated in Telangana state during 2015-2017.

Table-1: MSME Units Data in Telangana State (2015-2017)

Sl.No.	District	Number of MSMEs	Investment Amount (Crores)	Employment Generated (nos.)
1	Rangareddy	3,488	2,230.1	33,961
2	Karimnagar	1,571	1,406.7	19,480
3	Hyderabad	1,494	941.7	14,380
4	Nalgonda	960	690.2	8,425
5	Medchal-Malkajgiri	928	516.2	8,019
6	Medak	732	981.1	10,565
7	Mahabubnagar	437	399.6	3,862
8	Nizamabad	429	429.8	4,076
9	Khammam	397	357.5	4,011
10	Adilabad	384	359.8	4,607
11	Sangareddy	278	296	3,422
12	Rajanna Sircilla	248	80	2,058
13	Yadadri Bhuvanagiri	164	154.9	1,377
14	Warangal Urban	123	143.7	1,642
15	Siddipet	113	160.3	1,015
16	Suryapet	84	55.1	670
17	Peddapalli	60	26.6	791
18	Jagtial	55	13.5	255
19	Warangal Rural	47	67.1	509
20	Wanaparthy	44	17.2	279
21	Mancherial	39	29.3	347
22	Badradri Kothagudem	32	14.6	246
23	Nagarkurnool	32	13.2	189
24	Vikarabad	29	32.4	380
25	Jogulamba Gadwal	28	10.3	202
26	Kumuram Bheem	24	29.2	249
27	Jayashankar	22	23.7	247
28	Mahabubabad	15	12.1	202
29	Jangaon	13	25.9	148
30	Kamareddy	13	15.2	103
31	Nirmal	11	21.7	144
	Total	12,294	9,554.4	1,25,861

Figure-1: Telangana Districts – Employment Generated (2015-2017)

Data Analysis:

1. Maximum Employment Generated (more than 10,000 Jobs each) in 4 districts; they were Ranga Reddy, Karimnagar, Hyderabad and Medak.
2. These are the 4 Districts were Maximum Investment also went in. These four Districts have experienced investments of More than Rs 900 crore each.
3. That means, On Average if we Invest around Rs 900 crore in India (as on 2015-2020), we can generate around 10,000 Jobs.
4. From the Data of these districts, specifically the four districts, we can infer that the Amount Invested is Strongly Correlated to Number of Employment Generated. This we can observe from Correlation Matrix as well (Table-2).

Correlation Matrix:

Table-2: Correlation Matrix

	Number of MSMEs	Amount Invested	Employment Generated
Number of MSMEs	1
Amount Invested	0.970839	1
Employment Generated	0.990223	0.990421721	1

Regression Matrix:

Table-3: Regression Table

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.997622
R Square	0.99525
Adjusted R Square	0.994911
Standard Error	515.7499
Observations	31
ANOVA
	df	SS	MS	F	Significance F
Regression	2	1.56E+09	7.8E+08	2933.416	2.98E-33
Residual	28	7447944	265998
Total	30	1.57E+09
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%	Lower 95.0%	Upper 95.0%
Intercept	-222.614	111.0664	-2.00433	0.054793	-450.123	4.895488	-450.123	4.895488
Number of MSMEs	5.06772	0.551674	9.18607	6.06E-10	3.937666	6.197774	3.937666	6.197774
Amount Invested	7.374326	0.791955	9.311547	4.54E-10	5.75208	8.996572	5.75208	8.996572

T-Test (No.of MSMEs and Employment Generated):

Table-4: T-Test-1 (No.of MSMEs and Employment Generated)

t-Test: Two-Sample Assuming Unequal Variances
	Number of MSMEs	Employment Generated
Mean	396.5806452	4060.032258
Variance	506922.9183	52267120.3
Observations	31	31
Hypothesized Mean Difference	0
Df	31
t Stat	-2.807767369
P(T<=t) one-tail	0.004276448
t Critical one-tail	1.695518783
P(T<=t) two-tail	0.008552897
t Critical two-tail	2.039513446

T-Test (No.of MSMEs and Amount Invested):

Table-5: T-Test-1 (No.of MSMEs and Amount Invested)

t-Test: Two-Sample Assuming Unequal Variances
	Number of MSMEs	Amount Invested
Mean	396.5806452	307.8064516
Variance	506922.9183	245999.3613
Observations	31	31
Hypothesized Mean Difference	0
df	54
t Stat	0.569629547
P(T<=t) one-tail	0.285645586
t Critical one-tail	1.673564906
P(T<=t) two-tail	0.571291172
t Critical two-tail	2.004879288

Further Findings:

1. From Correlation Matrix, we can Infer that Both Number of MSMEs we setup and Amount of Money We Invested both are Highly Strongly Correlated to Employment Generated (both have >0.99 Correlation Coefficient Value)
2. Among Number of MSMEs and Amount Invested, Amount Invested is More Strongly Correlated to Employment Generated than the Number of MSMEs setup
3. That means, How many number of Business Units we setup is not Important, more important is How Much Money We invested is More Important in Order to Generate More number of Jobs.
4. Coming to Regression Results, both Number of MSME Units and Amount Invested have Effect over the Employment Generated.
5. That means, the change in Number of MSMEs or the Change in Amount Invested effects the Number of Jobs Created
6. From T-Test-1 Results We can Infer that Number of MSMEs setup is having effect over Employment Generated (t-test two tailed value is within tabulated values of -2.802 and +2.802) (Here P-values are <0.05 indicating significant). That means, The More is the Number of MSMEs we setup leads to more jobs creation.
7. From T-Test-2 Result, we can infer that Number of MSMEs started is nothing to do with Amount Invested. (t-test two tailed critical value is not within -0.572 and +0.572). P-values also came higher. It indicates few MSMEs may invest huge money or Many MSMEs can invest huge money. That means, numbers of MSMEs is not the key, Amount invested is key for Employment Generation.

Hope this is Useful.

Best wishes,

Dr.Goparaju Purna Sudhakar

(https://gpsudhakar.com)

References:

1. Source: “Socio Economic Outlook-2018”, Planning Department, Govt. Telangana, India, 2018