Statsguru: Importance of MSMEs in times of Covid-19, economic slowdown

The assurance given by the finance minister that benefits given to MSMEs will not be withdrawn if they grow in size may solve this problem to an extent

Finance Minister Nirmala Sitharaman announced several measures for the micro, small, and medium enterprises (MSMEs), on the first day of her series of package announcements after Prime Minister Narendra Modi talked about Rs 20-trillion support to the economy. The need to support MSMEs is evident if one looks at their contribution to the gross domestic product (chart 1). 

The sector’s importance could be gauged from the fact that its share in GDP was still over 28 per cent in 2016-17, even after dropping in recent times. The share will increase further, merely through a change in definition of MSME, incorporating