MSMES AND ACCESS TO CREDIT IN POST-PANDEMIC INDIA: AN EMPIRICAL ANALYSIS

Micro, Small and Medium Enterprises occupy a central position in India’s economic structure due to their contribution to employment generation, industrial output, and regional development. However, access to timely and adequate institutional credit has remained a persistent constraint, particularly for micro enterprises. The COVID-19 pandemic intensified these challenges, necessitating large-scale policy intervention. This study examined the pattern, growth, and distribution of MSME credit in the post-pandemic period using secondary data from 2018–19 to 2023–24. The analysis revealed that post-pandemic credit policies—especially government-backed credit guarantees, liquidity support by the Reserve Bank of India, and regulatory forbearance—were effective in restoring aggregate credit flows to the MSME sector. MSME credit outstanding registered strong growth during the recovery phase, underscoring the counter-cyclical role of policy support. However, the findings also highlight significant structural imbalances. Credit expansion has been uneven across enterprise categories, with micro enterprises continuing to face barriers related to informality, collateral requirements, and limited credit histories. Moreover, post-pandemic credit measures largely operated within the existing formal credit framework, limiting their reach to enterprises already integrated into institutional finance. The study concludes that while post-pandemic credit policies succeeded as short-term stabilization tools, achieving long-term and inclusive MSME financial development requires deeper structural reforms. Strengthening alternative credit assessment mechanisms, expanding coverage to first-time borrowers, rationalizing credit guarantees, and promoting formalization are essential to ensuring that MSME credit growth translates into broad-based and sustainable economic development.

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