Effect of fiscal policies on growth of MSMEs in India

Abstract

Micro, Small and Medium Enterprises (MSMEs) form one of the most important segment of the economy in terms of their contribution to country’s industrial production, generation of employment, creation of an entrepreneurial base and promotion of equitable distribution. To empower the MSME sector, the central government has passed the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006 which classified Micro, Small and Medium enterprises into two divisions, Manufacturing and Services according to the investments made by them in plant, machinery, and equipment. From 2018, businesses were classified on the basis of both investments and annual turnover. A revised classification for MSMEs has been announced in the Aatmanirbhar Bharat Package in May 2020 with both manufacturing and services sectors clubbed together