MSME Growth and Economic Development in India: An Empirical Analysis of Employment, Investment and Gross Value Added

The contribution of Micro, Small and Medium Enterprises (MSMEs) in production, employment, entrepreneurship and value addition is significant and important to Indian economic development. The present study explores the trend and contribution of MSMEs in economic growth of India and also attempts an analysis between the share of MSME Gross Value Added (GVA) in GDP and the real Gross Value Added (GVA) growth. The study uses descriptive and analytical research type with secondary data analysis, starting from the period 2014-15 to 2023-24, that is obtained from official government and institutional data sources. Descriptive statistics, trend analysis, Pearson correlation and Ordinary Least Squares (OLS) regression are employed for analysis. The results show that the contribution of MSMEs to the Indian economy remained large and fairly stable at around 29.59 per cent of the GVA on an average basis for the period of the study. MSME GVA share has shown positive and significant correlation with real GVA growth with r = 0.680 and p = 0.030 as revealed by Pearson correlation. The regression model is also statistically significant and accounts for around 46.2 per cent of the variation in the observed real GVA growth. The study has found that the contribution of MSMEs has positive association with the economic performance in India and emphasised the need to augment MSME productivity, formalisation, access to finance, technological capabilities and market opportunities for sustainable economic growth.