Non-Financial Costs Impedes Growth: A Study of MSMEs in Meghalaya

Abstract

Small industry is regarded as one of the major planks of India’s economic development strategy since independence. Today, small industry occupies a position of strategic importance in the Indian economic structure due to its significant contribution in terms of output, exports and employment. But the strategic importance of small business loses its relevance when paucity of fund obstructs implementation of the appropriate strategy. Many studies have reveals that small entrepreneurs are deprived of adequate finance, hence makes them vulnerable to not only set-up their ventures but also to undertake various diversification and modernization activities. In addition, small entrepreneurs are reluctance to approach financial assistance due to the perceived cost of finance. Apart from interest cost involved in using debt finance, the entrepreneurs had to bear lots of non-financial cost due to delay/ harassment/ business interference involved in the process of availing finance from formal financial institutions. The present study on industrial finance for small industries in Meghalaya, is not only essential for solving the problems of deprived finance but also to tackle the problems confronting the borrowers to avail easy and speedy finance. In this backdrop, the present study attempt to analyse the problem due to non-financial cost like, delay/ harassment/ business interference involved in the process of availing finance from formal financial institutions.

Keywords: Small, Enterprise, Finance, Loan, Processing

View PDF