A Comparative Research Upon Influences and Policy Tendencies of Micro, Small and Medium Enterprise In India

Exploring the Impact of Policy Changes on Micro, Small and Medium Enterprises in India

Abstract

The presentarticle deals with micro, small and medium enterprises and their role ineconomic growth and employment generation in the Indian context. The articlediscusses how policy environment for promoting MSMEs changed from‘protectionism’ during the pre-1990s to ‘export orientation’ during thepost-1990s. The key constraints faced by the MSMEs including access to creditand technology, red tapism etc. are discussed. While lossesand layoffs at large firms are making headlines, many micro, small andmedium-sized enterprises (MSMEs) are also severely affected by the globaleconomic slump of 2008-09. Weak demand and tight credit are the chief pressuresfaced by these enterprises. Demand stimulus measures will assist allenterprises, whereas access to finance needs more specific targeting for smallfirms. Cooperatives (i.e. cooperative enterprises) appear to be the leastaffected by the crisis. There islimited direct help for informal and micro-enterprises, which dominate theenterprise landscape in most developing countries. Micro-business startups arelikely to increase as laid-off workers and returning migrant workers seek tomake a living. Success for these new businesses and indeed many existing oneswill be difficult to achieve, given weak demand and limited credit access.Entrepreneurs will need to be entrepreneurial in seeking out and exploiting newbusiness opportunities.