Ending Soon! Save 33% on All Access

MSMEs Optimistic on Employment but Crestfallen About the Broader Economic Outlook "MSMEs can't decouple from the broader economic trends," states SIDBI Chairman & Managing Director Mohammad Mustafa

By Aastha Singal

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.


Owing to government initiatives and promotions, Medium, Small and Micro Enterprises (MSMEs) in India have been maintaining a positive outlook towards the future prospects. However, the quarterly survey of small businesses by state-run Small Industries Development Bank of India (SIDBI) report says otherwise.

Being a crucial contributor to the country's economy, the sentiment of MSMEs has been severely impacted by the deepening crisis of the Indian economy. Shedding light on the broader trends, SIDBI Chairman and Managing Director Mohammad Mustafa said, "MSMEs can't decouple from the broader economic trends."

The index of MSMEs' outlook has fallen to 120 in the June quarter from 122 in the preceding quarter. Conducted with rating agency CRISIL, the report comes days after the disappointing GDP growth numbers that which show the economy has lost its steam, clipping at a low 5 percent in the three months period to June, a 25-quarter low.

Sectors Affected

Manufacturing sector sentiment was impacted by consumption slowdown stemming from factors such as higher ownership costs in the auto sector and pre-poll slowdown in domestic tendering, especially in the capital goods segment. The proportion of those reporting a good survey quarter came down to 27 per cent for the reporting period from a high 45 per cent in the year-ago period.

The services sector also came down at 28 per cent from 44 per cent. The moderation in sentiment was mainly on account of cautious outlooks towards global economic growth, which is expected to impact IT spends and lower growth in domestic freight demand, given sluggish consumption.

Keeping the Hope Alive

Small businesses create large amount of jobs all across the nation. Despite the depressing outlook, job creators are sanguine on employment. Larger MSMEs, employing over 25 people, are more optimistic about the next quarter. The survey also mentioned respondents having an optimistic approach about the September quarter, suggesting that the June quarter can be a 'blip' rather than a trend.

Mustafa said selected segments like commercial services and supplies, healthcare providers and services and human resources have shown an increase in positive sentiment during the reporting period. Despite the concerns on outlook, there was a surprising 16 per cent increase in hiring up from 11 per cent in the year-ago period.

Aastha Singal

Entrepreneur Staff

Former Features Writer

A business journalist looking to find happiness in the world of startups, investments, MSMEs and more. Officially started her career as a news reporter for News World India, Aastha had short stints with NDTV and NewsX. A true optimist seeking to make a difference, she is a comic junkie who'd rather watch a typical Bollywood masala than a Hollywood blockbuster. 


How to Break Free From the Cycle of Overthinking and Master Your Mind

Discover the true cost of negative thought loops — and practical strategies for nipping rumination in the bud.

Growth Strategies

AI Agents Startup Secures $4M to Revolutionize Customer Onboarding & Retention

Under the leadership of Gaurav Aggarwal and Anuja Verma, Truva AI has created an innovative solution for customer onboarding and retention, leveraging sophisticated AI agents.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Side Hustle

These Brothers Had 'No Income' When They Started a 'Low-Risk, High-Reward' Side Hustle to Chase a Big Dream — Now They've Surpassed $50 Million in Revenue

Sam Lewkowict, co-founder and CEO of men's grooming brand Black Wolf Nation, knows what it takes to harness the power of side gig for success.

News and Trends

Gurugram-based Wealth Management Firm Finvolve Closes Maiden INR 100 Cr Fund, Launches Two New Funds

Finvolve also announced the launch of two new funds, pre-seed Accelerator Fund and Scale Fund, including a GIFT city, with an investment capacity of around INR 500 crore to widen its investment spectrum: Accelerator, Seed, and Scale.

Growth Strategies

Why Are Electric Vehicles More Likely To Hit Pedestrians?

We must develop solutions that increase pedestrian awareness of EV presence, such as implementing pedestrian alert systems or enhancing vehicle design for improved visibility.