Impact Of Inculcating Financial Discipline Among Msme: Special Focus On Key Areas Of Gujrat And Rajasthan

In the pavement towards development , MSME sector has proven to be a major contributor in India with contribution towards GDP being upto 30% and contribution to Indian export upto 48% which marks the significance of MSME. Despite being such a major contributor to uplift the economy it still needs impetus for meeting financial requirements of working capital for day to day business and long term loans for building capital assets. They also lack financial discipline of working effectively unlike large corporates giants because of which they are not able to work proficiently. Among MSMEs maximum are Micro sectors which are present more in remote areas and lack financial discipline leading to lower bank support and quick mortality of the unit. Hence research on key aspects financial discipline among MSMEs is very much relevant in today’s scenario. Popularization of organized working capital loans from Banks/FIs and lower dependency on unsecured loans from market and credit period from raw material providers is one of such aspects because of lower interest rates and better operating cycle assessments at bank prior to lending. Switching to higher business models also poses to be a solution of arranging internal capital funds to run the business to lower financial leverage position and dependency on external sources on the cost of higher pricing. Further other means like encouragement on minimum mandatory investments in MSMEs by FDI for entering Indian market may be a good option to encourage our indigenous MSMEs. Further, many MSMEs especially micro sectors are hesitant to contact banks for credit requirements and encouragement of “Business correspondent “ concept for popularizing and sanctioning MSME loans in rural areas may be encouraged as hiring BC who would be a person from the same local community who may educate the local people in their vernacular language there by better influencing small micro units like tailors, saree business, etc. to approach banks for liquidity requirements to run business . Moving towards Cash less economy by encouraging usage of more technological banking products is also a good solution to spread buyer market of MSME