Micro, of such policies, this study attempts to

Micro, small, and medium-sized enterprises (MSMEs) have gained
increased attention

in India in recent times, considering their strategic importance
to the economy and the

country. MSMEs play an important role in generating
employment—48.8 million

MSMEs in the country provide employment to 111.4 million people.
MSMEs in the

manufacturing sector alone produce more than 6,000 products and
contribute 7.7% of

the GDP of the country. Similarly, MSMEs in the services sector
contribute 27.4% of

country’s GDP.

In view of the fact that banks are the predominant source of
finance in India, the

Reserve Bank of India includes micro and small enterprises in the
list of priority lending

sectors. Banks have also been advised to achieve a year-on-year
growth of 20% in

credit to micro and small enterprises and an annual growth of 10%
in the number of

microenterprise accounts. In view of such policies, this study
attempts to understand

whether such incentives and schemes have percolated down to the
MSMEs and if

are aware of them.


According to International Finance Corporation (2012), the supply
of finance to the

MSME sector is estimated to be 32.5 trillion Indian rupees (Rs).
This total comprises

contributions from informal finance, formal finance, and
self-finance. Informal sources

and self-finance contribute Rs25.5 trillion to the sector, of
which informal finance

accounts for Rs24.4 trillion. In other words, 78% of the finance
used by MSMEs is met

by informal sources and self-finance. The remaining 22% (Rs6.9
trillion) is provided by

banks and
NBFCs, of which banks provide the bulk (91.8%).

A number of positive factors are working to create a growth
enabling eco-system for the MSME sector. First, favourable credit policy
measures, such as 20 percent annual credit growth to MSMEs, 60 percent of the
MSME credit to be embarked for micro enterprises and 10 per cent annual growth
in the number of microenterprise accounts. More importantly, its continuous
monitoring by Government of India and Reserve Bank of India will enhance credit
access to the sector. Second, major constraints of MSME sector are now being
addressed by SIDBI’s new business model which is oriented towards filling the
financial gaps and developmental gaps in the MSME eco-system. In its new
business model, SIDBI would be providing venture /risk capital, energy
efficiency investment loans, bills discounting / factoring which are generally
not being

provided adequately to MSMEs by banks. Credit flow to MSME sector
will be further augmented by SIDBI’sinitiatives in setting up of Credit
Advisory Centres with industry associations in clusters and providing loan
facilitation / syndication services.

Third, a major constraint of information gap in MSME sector is now
being addressed by SIDBI’s




MSME Sector – Principal

No. of Enterprises in
2014-15 (in million) Out of which,(in millions) 

 a. Percentage share of Registered Units*                                                                       
6 %                                                  

 b. Percentage share of Un-registered
units*                                                               94%   

c. Percentage share of
Socially Backward Classes (SCs/STs/OBCs)*                          51 %                  

 d. Percentage share of Rural Units*                                                                               

 e. Percentage share of women enterprises*                                                                 
7.4 %

2. Employment in
2014-15 (in million)                                                                          

 3. Average Employment per Enterprise

 4. Investment per employment ( Lakh)*                                                                    

 5. Percentage of Enterprises availing

a. From Institutional

 b. From Non-institutional sources                                                                                 2.1%

 c. Percentage of Enterprises without loans /
self-finance                                        92.7%

6. Percentage share of
MSME GVA out of India’s GVA in 2014-15                          33.3%

7. Percentage share of
MSMEs in India’s Manufacturing Output in 2014-15         33.4%

 8. Percentage share in India’s exports in

(SIDBI Annual report 2016-17,)