Thiruvananthapuram: The large-scale closure of MSMEs — over 42,000 in the past nine years — in the state, as reported by TOI on Sunday, has brought a new dimension to the political debate on Kerala's industrial climate.
Thiruvananthapuram MP and CWC member Shashi Tharoor, who earlier invited criticism from his own party members for his article praising Kerala's industrial ecosystem, said he was "dismayed to see that the Kerala start-up entrepreneurship story is not what's been reported."
In a post on social media platform X, he said the only silver lining is that at least the GoK's claims point to the right intentions. "We need more MSME start-ups and not just on paper. Kerala must head this way! There's more about what the official numbers conceal," he said, while sharing the TOI report.
Industries minister P Rajeeve said the MSME closure figures should be viewed in a comparative context with other states and not as a standalone one. "The number of MSME closures in Kerala is not alarming and would not tarnish the achievements of the state govt in the sector. Tamil Nadu recorded 50,000 closures, which is higher," he said.

Former cabinet secretary and Planning Board former vice-chairman K M Chandrasekhar said the govt should take the matter seriously irrespective of the scenario in other states. "Closure of 42,000 MSMEs, if it happened, is definitely a matter of concern irrespective of whether it happened in other states or not. Govt should study the reasons and take corrective steps. With regards to 3.40 lakh new MSME registrations too, govt is duty-bound to find if these are new ones or those in the Udyam list," he said.
Economist and former head of Gulati Institute of Finance and Taxation (GIFT), D Narayana, linked the MSME crisis to broader economic disruptions. "The economy and the MSME sector have been in bad shape because of three reasons—demonetisation, introduction of the GST regime and Covid pandemic. Many MSMEs were adversely affected by these three factors. The Centre later came up with sops like easy loans for MSMEs that were registered in the Udyam scheme, when most of these defunct ones got registered, which is why this surge in numbers is seen now," he said.
The renewed focus on challenges faced by Kerala's MSME sector is politically significant, with local body elections scheduled for this year and assembly elections next year. Even otherwise, the closure figures suggest that they require deeper policy introspection rather than political posturing. It is to be seen if the govt acknowledges this concern.