MSME: Post Analysis of Union Budget 2024 to 2025
Micro, Small, and Medium Enterprises (MSMEs) represent a fundamental pillar of economic development,
especially in emerging economies. Defined by their size, scale of operations, and revenue generation, these
enterprises contribute significantly to job creation and innovation. MSMEs embody diversity in terms of the goods
and services they offer while demonstrating resilience in the face of various economic challenges. By fostering
entrepreneurship, MSMEs not only enhance economic stability but also play a crucial role in empowering
marginalized communities, including women. This write-up delves into the significance, challenges, and government
initiatives pertaining to MSMEs, highlighting their contribution to national development.
MSMEs are classified into three categories: Micro Enterprises, with an investment of less than ₹1 crore and a
turnover below ₹5 crores; Small Enterprises, with investments less than ₹10 crores and turnovers below ₹50
crores; and Medium Enterprises, with investments under ₹20 crores and turnovers less than ₹100 crores.
These enterprises are vital to India's economic landscape, contributing approximately 30% to the country’s GDP
and generating considerable employment opportunities. Notably, they contribute about 28% to the
manufacturing output and account for nearly 45% of the total exports, further emphasizing their global
competitiveness.
Historically, MSMEs evolved from informal, small-scale units in the pre-industrial era to structured
manufacturing entities during the Industrial Revolution in the 18th and 19th centuries. The post-war period saw
increased government initiatives aimed at nurturing MSME growth, and globalization in the 1980s and 2000s
nudged these enterprises to adapt to international markets and competition. Today, technological
advancements and digital platforms are transforming how MSMEs operate, enabling them to innovate and
expand their reach.
Despite their importance, MSMEs face several challenges, including inadequate access to finance, delayed
payments from clients, and a limited skilled workforce. Branding poses an additional hurdle, affecting their
market visibility and competitiveness. To combat these challenges, recent budgetary provisions have focused
on enhancing credit accessibility, with initiatives such as Collateral-Free Loans and a Risk-Sharing Mechanism
that encourages banks to lend more freely to these enterprises. The Digital Footprint-Based Assessment
further aids in evaluating credit risk through digital profiles, aiming to simplify access to the necessary capital
for growth.
In times of financial distress, the government has implemented measures such as Credit Guarantee for Stressed
MSMEs to reassure banks against defaults and an increased Mudra Loan Limit to provide higher loan amounts
for micro and small enterprises. Additionally, the expansion of the TReDS Platform facilitates MSME financing
through a dedicated online platform, while enhancing the presence of the SIDBI strengthens the overall support
structure for these businesses.
The ongoing ECLGS initiative highlights the steady growth in allocations, rising from ₹3,000 crore in 2020-21 to
₹6,000 crore in 2024-25, showcasing the government’s commitment to sustaining MSME growth and resilience.
Important initiatives such as MUDRA Loans, CGTMSE, Msme Samadhaan, and GeM offer significant support in
terms of credit access and public procurement, creating a positive ecosystem for MSMEs.
The transformative potential of Micro, Small, and Medium Enterprises (MSMEs) can be unlocked further by
integrating blockchain smart contracts and sustainable practices, while also establishing MSME innovation hubs that
promote collaboration and digital transformation. This holistic approach will not only enhance their competitiveness
but also contribute to their long-term growth. As MSMEs continue to drive economic development, targeted
support and strategic initiatives from the government will be paramount in overcoming the challenges they
currently face, ensuring their vital role in the growth story of the nation remains steadfast.
Team Members:-
Milonee Gupta
Mentored By:-
Anwesha Dash
Mr. Satyajit Dikshit
Avisek Nanda Sai Dip
Jatin Kalipi
