Challenges Of Msmes In Economic Development

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The Micro Small and Medium Enterprise have a very important role in the economic and social development of any country. This sector plays a significant role in the growth of the economy with their operational, proficient, flexible and inventive entrepreneurial spirit. The MSME sector makes a significant contribution to the country’s manufacturing output, service and exports and they are accredited with creating the maximum employment growth as well as accounting for major share of industrial production and exports. These enterprises have been measured as an instrument of commercial growth and as a significant tool for encouraging equitable expansion worldwide. The MSME sector has employment potential at a low capital cost which is…show more content…
In many economies, these enterprises contribute more than 90%of the total enterprise. MSMEs account for major share in industrial production and exports. Even in India these sector play a major role in the industrial growth and development. Compared to overall industrial sector, MSME sector has constantly showed higher growth rate. The MSME sector face many challenges such as timely credit availability, requirements of collateral security, their access to equity capital is limited, they do not access to global market, they have poor technology levels and do not get access to modern technology. Despite of facing such innumerable challenges, the MSME sector has shown commendable innovativeness, flexibility and resilience to endure recent economic downturn and recession. In spite of facing these restrictions the MSME sector have made a substantial contribution towards technological development and exports. These sectors have developed and establish in many industries such as agricultural inputs, chemical and pharmaceuticals, food processing, electronics, electro-medical equipment’s, etc. Thus MSMEs contribute enormously to socioeconomic development of the…show more content…
3. Other nationalized banks: This group comprises of private sector banks that were nationalized. The Indian government nationalized 14 private banks in 1969 and another 6 in the year 1980. 4. Regional rural banks: The RBI in the year 1975 based on recommendations of banking commission established these; these were established to operate exclusively in rural areas to provide credit and other facilities to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs. 5. Private sector banks: This group consists of banks that were established by the private states, community organizations or by a group of professionals for the cause of economic betterment in their area of operations. Initially their operations were concentrated in a few regional areas. However, their branches gradually spread throughout the nation as they grew. These banks were started as profit oriented companies after the RBI opened the banking sector to the private sector. These banks are mostly technology - driven and better managed than other
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