Contribution of Schedule Commercial Bank's Credit for Entrepreneurship Development of MSMES in India

Micro Small and Medium enterprises (MSME) sector has been playing an important role in the development of Indian economy. On the one hand, it creates entrepreneurial awareness among the youth and motivates them to establish MSME unit by giving proper training. On the other hand, it provides gainful employment lo a large section of population and makes significant contribution to GDP of the country. The main objective of the study is to analyze the impact of Commercial Bank's credit to MSMEs on growth of Indian Economy. The study employed GDP as a proxy of entrepreneurship development of the economy for the study period 1991 to 2014-15. Co-integration and error correction model has been deployed to estimate the relationship between the variables. All the variables used are stationary at first difference and the result shows that there is no long term relationship exists among line variables. The main finding of the study is that the Commercial Bank's credit to MSMEs did not create any significant effect on economic growth in India in the study period. The result revealed that MSMEs did not have sufficient access to credit and financial institutions have failed to bridge up the gap between demand for and supply of credit. The Study recommend that Government should take appropriate measures lo give adequate and timely credit, low cost credit and access to equity capital to the MSMEs for faster entrepreneurship development in the Indian economy.