Background

Micro, small, and medium enterprises (MSMEs) are widely recognised as the backbone of India’s economy, generating employment, contributing to industrial output, and playing a pivotal role in socioeconomic development. With more than 60 million MSMEs contributing nearly 30% of India’s GDP, employing over 230 million people, and accounting for nearly half of exports, the growth of these enterprises is central to inclusive economic progress

The sector is labour-intensive, regionally distributed, and critical to rural and semi-urban livelihoods. Despite this scale and importance, MSMEs face persistent structural constraints, including difficulties accessing finance, regulatory hurdles, tax burdens, limited guidance, institutional support, and market awareness.

Policy materials, including RBI-backed financial literacy resources, demonstrate that collateral-free lending pathways do exist (e.g., credit guarantee schemes), but are underutilised due to a lack of awareness and guidance. Equally critical yet less visible is the challenge of financial literacy, understood as a combination of financial knowledge (products, institutions, concepts), skills (e.g., managing debt, calculating returns), and capability (planning, risk management, decision-making). 

In India, 33% of rural and 29% of urban populations lack access to basic financial instruments such as bank accounts, cards, or digital wallets. At a systems level, financial education efforts remain fragmented and risk missing important groups, while their delivery is more informational than practical or integrated.