Evaluative Study of Micro Small and Medium Enterprises in Madhya Pradesh

Abstract

Micro, Small and Medium Enterprises (MSME) are playing a vital role in the growth of Indian economy and are considered to be the engine of growth. By characteristics, MSMEs are labour intensive and helps in improving upon the socio-economic climate of the country. Since independence, Government of India has recognized the contribution of small-scale units in promoting balanced and equitable growth of the country. In order to ascertain the ground realities, for formulating effective policies / programmes to uplift the MSME sector, Govt. of India has conducted four periodical census surveys during 1972-73, 1988-89, 2001-02 and 2006-07, respectively. Hence, the purpose of this study has been threefold: Firstly to analyse the comprehensive database given in periodical census of MSME sector in providing an intertemporal picture of the pace of small- scale industrialization happened in India as well as in the state of Madhya Pradesh to capture the magnitude and direction of change in the number of working units, investment, employment and production in the MSME sector across four periodical census, Secondly to examine the comprehensive database to study the degree of industrialization in M.P. by doing district wise analysis and lastly to investigate the different factors affecting the performance of Madhya Pradesh MSMEs and its effect on MSME performance along with a moderating variable. newline newlineA comprehensive research model was developed based on knowledge gained from determinants effecting performance of Small scale Industries literature. The proposed research model included fifteen main factors: credit institution, cost of credit, working capital requirement, electricity, transportation, labour, raw material, market, competitor, machine and equipment, training, regulatory, taxes and subsidy, entrepreneur skills and firm s profit. Then, the model was empirically tested, with primary data collected from 608 entrepreneurs, using structured questionnaire. The data was collected from entrepreneur of Micro, Small and Medium Enterprises across madhya pradesh state of India. newline newlineThe results revealed that the pace of small- scale industrialization happened in India is showing upward trend while the state of Madhya Pradesh is showing more or less downward trend. There is a great regional disparity in the district of Madhya Pradesh. The outcome of this study regarding the performance of MSMEs research is twofold. Initially it has observed the direct relationship of the determinant on the firm s profit. Later, it has observed the indirect relationship of the determinant on the firm s profit through enterpreneur skills. It also suggested that an entrepreneur skill plays a crucial role in the relationship of cost of credit, electricity, labour and taxes and subsidy value to firm s profit. newline newlineIn Madhya Pradesh context, this is the first empirical research on state MSME, studing the impact of determinants on performance of MSME. This study s findings give empirical basis to entrepreneurs, acedemicians and government for understanding important factors affecting MSMEs performance. newline newline