Impact Of Public Financial Support On The Performance And Sustainability Of Msmes In Gujarat

Abstract

This study investigates the influence of public financial assistance on the performance and sustainability of Micro, Small and Medium Enterprises (MSMEs) in Gujarat, one of India’s most industrially developed states. MSMEs are vital to the country’s economic growth by generating employment opportunities, eradicating poverty and regional development. Nevertheless, MSMEs are vulnerable to many developing enterprises such as financial constraints, lack of access to markets, or technology gaps. The government extends financial assistance in the form of Subsidies, loans, grants and tax incentives for MSMEs to overcome challenges. This study evaluates how such financial assistance affects multiple dimensions of MSME performance related to operational efficiency, productivity, business expansion, innovation, revenue, market share and competitiveness. Primary data was collected from 250 MSME owners using a structured questionnaire in a mixed-methods process. The findings confirm that government financial support positively influences MSME performance: Operational efficiency (52%) along with productivity (44%), and competitiveness impact (46%) have all been improved. The findings also further indicate that the degree to which governmental schemes were advertised, the type of industry, and the careful and effective use of government financial support, all contribute to success in business. Using regression analysis, the study established the relationship between financial support, and MSME performance. Financial support received, the type of industry, and putting resources to use provide reasonable explanations for better business performance. The study demonstrates positive impacts, as well as challenges like bureaucracy and lack of awareness and comprehension that inhibits realization of full potential of government financial support. The findings indicate reforms to policies will enable a wider and more effective use of government financial support.