The Economic Survey 2025 stresses that faster economic growth in India is achievable through continued reforms that help small and medium enterprises (MSMEs) operate efficiently and compete effectively. The Union and state governments must work together to reduce regulatory burdens and unlock new growth opportunities for these enterprises. This would, in turn, enable MSMEs to contribute more to the economy and create employment.
Reducing Regulatory Burdens for MSMEs
The Economic Survey 2025 highlights that excessive regulations increase operational costs for businesses, which can slow down their growth. By reducing these burdens, the government can help firms become more efficient and cost-effective. It’s crucial for the government to continue its efforts to simplify regulations, as this will allow businesses to focus on innovation and growth rather than spending time and resources on compliance.
Challenges in the Regulatory Environment
While the government has implemented various policies to promote MSME growth, some challenges in the regulatory environment still exist. Many businesses in India tend to remain small to avoid regulations related to labour laws, safety, and taxation. This, unfortunately, affects employment growth and innovation. A more relaxed regulatory environment would encourage businesses to expand, leading to better labour welfare and higher productivity.
Steps for Future Reforms
The Economic Survey 2025 suggests that states need to take the next steps in regulatory reforms by reviewing existing regulations for cost-effectiveness. A three-step process is proposed, which includes identifying areas for deregulation, comparing regulations with other states and countries, and estimating the costs of these regulations on individual enterprises. The Ease of Doing Business 2.0 initiative, led by state governments, is key to addressing the root causes of business inefficiency.
By focusing on these areas, India can ensure that MSMEs are better equipped for growth and contribute more significantly to the national economy.