Finance

Why Are SMEs Being Considered as the Upcoming Backbone of the Indian Economy?

Role of SMEs in economic development of India (Contribution)

If you remember the financial year 2008-09, you can recall the global economic crisis. Heavyweights like the US and various European countries were struggling immensely. However, the Indian economy was stable, thanks to its dependency on local businesses, which boosted the country’s Gross Domestic Product (GDP). India’s GDP from April to September 2008 was 7.8%, with a major contribution made by Small and Medium Entreprises (SMEs). Just like that year, the future of our economy is highly dependent on SMEs today.

Role of SMEs in the Indian economy

India is constantly facing challenges because of the high unemployment rate and the extent of disparity between the poor and the rich. In a developing nation, this can be quite concerning, especially from an economic point of view. This is where SMEs come to our rescue.

Small and medium businesses create jobs and help boost the growth of a country’s economy. Some of the most prominent economists have suggested that if India has to emerge as a financially progressive nation, three crucial aspects need to be addressed at the earliest. These aspects are poverty, inequality, and unemployment.

SMEs can provide a helping hand to solve these aforementioned problems. They have a host of vacancies that allow them to hire many people. This helps to reduce unemployment. Moreover, it is easier to start a small business as it requires a lower capital. Getting a business loan has become easier in India, too, making it possible for many people to convert their ideas into a full-fledged business venture.

While MSME loans with affordable SME loan interest rates allow small enterprises to kick-start their business operations, many skilled and unskilled workers, who were unable to get an opportunity to work in large organizations, find daily jobs in these smaller concerns. Also, these businesses contribute to the development of the cities and states where they are established by lowering the gap in income equality. As small businesses provide services at cheaper costs, larger companies invest in them rather than outsource work to other countries. This helps in bolstering India’s GDP, proving that SMEs are becoming the backbone of the Indian ecomony.

Initiatives by the government to support SMEs

As SMEs contribute towards boosting the country’s employment and GDP, the Government of India has realized their potential. Prime Minister Mr. Narendra Modi has announced initiatives like ‘Make in India’ and ‘Startup India’, among others, to support them.

If you aspire to start a business, it is the right time to opt for an SME loan and contribute to the growth of the nation. With easy SME loan eligibility offered by lenders like Mahindra Finance, your dream can now become a reality.

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