Unlocking Growth: The Case for MSME Deregulation in India

The Economic Survey 2024-25 stresses the importance of deregulation for MSMEs to boost India's economic growth. Regulatory challenges hinder formalisation, productivity, and innovation. Effective deregulation by the union and state governments is crucial. Ease of Doing Business 2.0 should be state-led, focusing on fundamental issues.

The Economic Survey 2024-25 highlights the critical need for deregulating micro, small, and medium enterprises (MSMEs) in order to stimulate faster economic growth in India. Presented in Parliament by Finance Minister Nirmala Sitharaman, the survey underscores how regulatory challenges are impeding formalisation, labour productivity, and innovation.

The survey emphasizes that deregulation should be an integral component of reforms by both union and state governments. It argues that significant economic growth is only attainable if MSMEs can operate efficiently in a cost-effective manner. The implementation of Ease of Doing Business (EoDB) 2.0, spearheaded by state governments, should address root causes and streamline regulatory processes.

Notably, the survey provides a pragmatic roadmap for states to systematically review and reduce the regulatory burden on businesses. This includes identifying deregulation opportunities, comparing regulations across states and countries, and estimating their costs on enterprises. This approach aims to empower small businesses, boost employment, and create a conducive environment for growth and innovation.

(With inputs from agencies.)