Public Policy Interventions and MSME Growth in Post-Pandemic India
Keywords:
MSMEs, Public Policy, Post-Pandemic Recovery, India, Digital Public Infrastructure, Formalisation, EntrepreneurshipAbstract
Micro, small, and medium enterprises (MSMEs) continue to be at the core of the Indian employment base, local manufacturing capacity, competitiveness in export, and social mobility, but the pandemic has revealed the structural vulnerabilities of this sector in a particularly strange way. This paper builds a policy analysis of the role played by the post-pandemic public policy structure in India in influencing MSME recovery, adaptation, and growth. Based on the international literature on crisis, Indian policy documents, and recent evidence on digital finance, formalization, resilience, and digital transformation, the paper is based on six domains of intervention, including emergency credit support, formalization and registration reform, digital public infrastructure, market access and procurement, capability building and cluster support, and inclusion-oriented entrepreneurship policy. It is argued in the analysis that India has responded most to the policy where it was able to integrate speed, scale, and administrative simplicity, particularly in collateral-free credit guarantees, digital registration, and digital commerce infrastructure. The effects of the growth of these interventions are, however, skewed due to the fact that survival support has in many cases been much faster than productivity support, and formal enrollment has led to greater advancement than the enrichment of deeper capabilities. The paper suggests a comprehensive framework of the following steps of MSME policy based on finance, formalization, digital adoption, market access, resilience, and institutional coordination. It concludes that the future post-pandemic development of MSME in India will not rely as much on relief as on the ability of public policy to transform recovery into productivity, competitiveness, and inclusive enterprise development.
References
1. Agarwal, R., Dugar, A., Ghosh, P. K., & Jain, V. (2023). Building resilience for sustainability of MSMEs post COVID-19 outbreak: An Indian handicraft industry outlook. Socio-Economic Planning Sciences, 85, 101443. https://doi.org/10.1016/j.seps.2022.101443
2. Alt, R., Beck, R., & Smits, M. T. (2018). FinTech and the transformation of the financial industry. Electronic Markets, 28(3), 235–243. https://doi.org/10.1007/s12525-018-0310-9
3. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
4. Bartik, A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). The impact of COVID-19 on small business outcomes and expectations. Proceedings of the National Academy of Sciences, 117(30), 17656–17666. https://doi.org/10.1073/pnas.2006991117
5. Beck, T., & Demirgüç-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30(11), 2931–2943. https://doi.org/10.1016/j.jbankfin.2006.05.009
6. Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2008). Financing patterns around the world: Are small firms different? Journal of Financial Economics, 89(3), 467–487. https://doi.org/10.1016/j.jfineco.2007.10.005
7. Behera, H. (2021). COVID-19 pandemic and micro, small and medium enterprises (MSMEs): Policy response for revival. Margin: The Journal of Applied Economic Research, 15(4), 560–590. https://doi.org/10.1177/09738010211037485
8. Belitski, M., Guenther, C., Kritikos, A. S., & Thurik, R. (2022). Economic effects of the COVID-19 pandemic on entrepreneurship and small businesses. Small Business Economics, 58, 593–609. https://doi.org/10.1007/s11187-021-00544-y
9. Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: Toward a next generation of insights. MIS Quarterly, 37(2), 471–482. https://doi.org/10.25300/MISQ/2013/37:2.3
10. Brown, R., & Rocha, A. (2020). Entrepreneurial uncertainty during the Covid-19 crisis: Mapping the temporal dynamics of entrepreneurial finance. Journal of Business Venturing Insights, 14, e00174. https://doi.org/10.1016/j.jbvi.2020.e00174
11. Brown, R., Cowling, M., Rocha, A., & Mawson, S. (2022). Factors impacting SME business resilience post-COVID-19. Sustainability, 14(22), 14850. https://doi.org/10.3390/su142214850
12. Brown, R., Rocha, A., & Cowling, M. (2020). Financing entrepreneurship in times of crisis: Exploring the impact of COVID-19 on the market for entrepreneurial finance in the United Kingdom. International Small Business Journal, 38(5), 380–390. https://doi.org/10.1177/0266242620937464
13. Buteau, S. (2021). Roadmap for digital technology to foster India’s MSME ecosystem. Decision, 48, 387–400. https://doi.org/10.1007/s40012-021-00345-4
14. Chakravarty, S. R., & Pal, R. (2013). Financial inclusion in India: An axiomatic approach. Journal of Policy Modeling, 35(5), 813–837. https://doi.org/10.1016/j.jpolmod.2012.12.007
15. Chen, J., Elston, J. A., Jiang, J., & Zhang, W. (2023). The impact of Covid-19 containment lockdowns on MSMEs in India and resilience of exporting firms. Journal of Economic Behavior & Organization, 214, 289–308. https://doi.org/10.1016/j.jebo.2023.04.001
16. Chopra, R., Sidana, N., & Arora, A. S. (2025). Digital public infrastructure as a driver of financial inclusion in India. Journal of Social and Economic Development, 27, 1–23. https://doi.org/10.1007/s43621-025-02507-9
17. Cowling, M., Brown, R., & Rocha, A. (2020). Did you save some cash for a rainy COVID-19 day? The crisis and SMEs. International Small Business Journal, 38(7), 593–604. https://doi.org/10.1177/0266242620945102
18. Department of Financial Services. (2023). Other schemes: Emergency Credit Line Guarantee Scheme (ECLGS). Government of India. https://financialservices.gov.in/beta/en/other-schemes-emergency-credit-line-guarantee-scheme-eclgs
19. Eggers, F. (2020). Masters of disasters? Challenges and opportunities for SMEs in times of crisis. Journal of Business Research, 116, 199–208. https://doi.org/10.1016/j.jbusres.2020.05.025
20. Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10–11), 1105–1121. https://doi.org/10.1002/1097-0266(200010/11)21:10/11<1105::AID-SMJ133>3.0.CO;2-E
21. Gupta, S., & Arora, N. (2020). Investigating consumer intention to accept mobile payment systems through unified theory of acceptance model: An Indian perspective. South Asian Journal of Business Studies, 9(1), 88–114. https://doi.org/10.1108/SAJBS-03-2019-0037
22. Helfat, C. E., & Peteraf, M. A. (2003). The dynamic resource-based view: Capability lifecycles. Strategic Management Journal, 24(10), 997–1010. https://doi.org/10.1002/smj.332
23. Holl, A., & Rama, R. (2024). SME digital transformation and the COVID-19 pandemic: A case study of a hard-hit metropolitan area. Science and Public Policy, 51(4), 530–544. https://doi.org/10.1093/scipol/scae023
24. Islam, M. I. U. (2025). Leveraging blockchain and IoT for sustainable supply chain management in Industry 4.0. In N. Sharma (Ed.), Next-generation data-driven Business 4.0 using the Internet of Things (pp. 67–84). CRC Press. https://doi.org/10.1201/9781003568988-5
25. Islam, M. I. U., Lone, U. M., Bhat, I. A., Aamir, S., & Salau, A. O. (2024). Open network for digital commerce in India: Past, present, and future. Open Information Science, 8(1), 20240005. https://doi.org/10.1515/opis-2024-0005
26. Islam, M. I. U., Nisa, K. U., Mufti, S., Ansarullah, S. I., Ikhlaq, S., & Yousuf, T. (2025). Artificial intelligence in tax compliance: Transforming taxpayer behavior and system efficiency. In Modeling and profiling taxpayer behavior and compliance (pp. 251–270). IGI Global. https://doi.org/10.4018/979-8-3373-0422-9.ch011
27. Islam, M. I., Nisa, K. U., Ikhlaq, S., Yousuf, T., Gulzar, S., & Ansarullah, S. I. (2026). Fostering social innovation through urban technologies. In Tech-enabled urbanism and entrepreneurship for inclusive cities (pp. 103–119). Springer. https://doi.org/10.1007/978-981-95-3873-7_6
28. Juergensen, J., Guimón, J., & Narula, R. (2020). European SMEs amidst the COVID-19 crisis: Assessing impact and policy responses. Journal of Industrial and Business Economics, 47, 499–510. https://doi.org/10.1007/s40812-020-00169-4
29. Kaur, H. (2023). COVID-19 and MSMEs in India: An analysis of pandemic shock and policy response. International Journal for Multidisciplinary Research, 5(6), 1–17. https://doi.org/10.36948/ijfmr.2023.v05i06.8855
30. Khurana, S., Dutta, T., & Ghura, A. S. (2022). SMEs and digital transformation during a crisis: The emergence of resilience as a second-order dynamic capability in an entrepreneurial ecosystem. Journal of Business Research, 150, 623–641. https://doi.org/10.1016/j.jbusres.2022.06.048
31. Kuckertz, A., Brändle, L., Gaudig, A., Hinderer, S., Morales Reyes, C. A., Prochotta, A., Steinbrink, K. M., & Berger, E. S. C. (2020). Start-ups in times of crisis: A rapid response to the COVID-19 pandemic. Journal of Business Venturing Insights, 13, e00169. https://doi.org/10.1016/j.jbvi.2020.e00169
32. Lee, R., Tuselmann, H., Jayawarna, D., & Rouse, J. (2024). Entrepreneurship in times of crisis: A comprehensive review with future directions. Entrepreneurship Research Journal, 14(4), 587–617. https://doi.org/10.1515/erj-2022-0366
33. Mehraj, D., Islam, M. I. U., Nissa, V. U., & Iqbal, S. (2024). Challenges and prospects in the adoption of mobile payment systems in India. In Business, management and economics annual volume 2024. IntechOpen. https://doi.org/10.5772/intechopen.114904
34. Mehraj, D., Islam, M. I. U., Qureshi, I. H., Basheer, S., Baba, M. M., & Nissa, V. U. (2023). Factors affecting entrepreneurial intention for sustainable tourism among the students of higher education institutions. Cogent Business & Management, 10(3), 2256484. https://doi.org/10.1080/23311975.2023.2256484
35. Ministry of Commerce and Industry. (2025). Open Network for Digital Commerce and Government e-Marketplace updates. Government of India. https://commerce.gov.in/
36. Ministry of MSME. (2025). Annual report 2024–25. Government of India. https://msme.gov.in/
37. Mittal, V., Chawla, M., Gupta, P., Singh, A., & Verma, N. (2025). Fostering competitiveness of Indian MSMEs through information technology and digitalization. Entrepreneurship & Regional Development, 37(5–6), 612–635. https://doi.org/10.1080/02681102.2025.2453211
38. Mohapatra, S., Sethi, N., Dash, A., & Rath, B. N. (2025). Assessing the role of financial literacy in fintech adoption by micro and small enterprises in India. Sustainability, 17(10), 4340. https://doi.org/10.3390/su17104340
39. Nambisan, S. (2017). Digital entrepreneurship: Toward a digital technology perspective of entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055. https://doi.org/10.1111/etap.12254
40. Papadopoulos, T., Baltas, K. N., & Balta, M. E. (2020). The use of digital technologies by small and medium enterprises during COVID-19: Implications for theory and practice. International Journal of Information Management, 55, 102192. https://doi.org/10.1016/j.ijinfomgt.2020.102192
41. Prasuna, A. P., Bhuvaneswari, R., & Sireesha, P. (2024). Unveiling the factors influencing financial inclusion in India: A comprehensive analysis. Cogent Economics & Finance, 12(1), 2381682. https://doi.org/10.1080/23322039.2024.2381682
42. Raman, P., & Aashish, K. (2021). To continue or not to continue: A structural analysis of antecedents of mobile payment systems in India. International Journal of Bank Marketing, 39(2), 242–271. https://doi.org/10.1108/IJBM-04-2020-0167
43. RAMP. (2024). Raising and accelerating MSME performance programme. Ministry of MSME, Government of India. https://ramp.msme.gov.in/
44. Rawanda, M. I. I. (2025). Transforming customer service with AI agents: Enhancing efficiency and personalisation in the service sector. In Harnessing emotion AI for customer support and employee wellbeing (pp. 241–268). IGI Global.
45. Ritu. (2024). The role of MSMEs in post-pandemic economic recovery in India. International Journal of Advanced Academic Studies, 7(2), 120–127. https://doi.org/10.33545/26179210.2024.v7.i2.521
46. Roggeveen, A. L., & Sethuraman, R. (2020). How the COVID-19 pandemic may change the world of retailing. Journal of Retailing, 96(2), 169–171. https://doi.org/10.1016/j.jretai.2020.04.002
47. Sahoo, K. C., & Thakur, A. K. (2023). Enhancing the performance of Indian MSMEs by implementing supply chain finance amidst and beyond the COVID-19 crisis. Benchmarking: An International Journal, 30(8), 2462–2488. https://doi.org/10.1108/BIJ-11-2021-0668
48. Satalkina, L., & Steiner, G. (2020). Digital entrepreneurship: A theory-based systematization of core performance indicators. Sustainability, 12(10), 4018. https://doi.org/10.3390/su12104018
49. Soomro, B. A., Memon, M., & Mangi, S. A. (2024). The adoption of digital technologies by small and medium-sized enterprises for sustainability and value creation in Pakistan: A technology-organization-environment framework. Sustainability, 16(17), 7351. https://doi.org/10.3390/su16177351
50. Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of sustainable enterprise performance. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640
51. Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Dong, J. Q., Fabian, N., & Haenlein, M. (2021). Digital transformation: A multidisciplinary reflection and research agenda. Journal of Business Research, 122, 889–901. https://doi.org/10.1016/j.jbusres.2019.09.022
52. Verma, S., Das, S., & Misra, S. (2024). Digital finance and MSME performance in India: Evidence from World Bank enterprise survey data. Journal of Entrepreneurship in Emerging Economies, 16(6), 1407–1432. https://doi.org/10.1108/JEEE-12-2023-0744
53. Vial, G. (2019). Understanding digital transformation: A review and a research agenda. Journal of Strategic Information Systems, 28(2), 118–144. https://doi.org/10.1016/j.jsis.2019.01.003
54. Warner, K. S. R., & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long Range Planning, 52(3), 326–349. https://doi.org/10.1016/j.lrp.2018.12.001
55. Widayani, A., Fauzi, A. A., Purwanto, E., & Hapsari, R. D. V. (2022). Barriers to digital payment adoption: Micro, small and medium enterprises. Management & Marketing. Challenges for the Knowledge Society, 17(4), 401–418. https://doi.org/10.2478/mmcks-2022-0029
56. Yeon, J., Kim, J., & Son, J. (2022). Implementing strategic responses in the COVID-19 market crisis: A study of SMEs in India. Journal of Indian Business Research, 14(4), 415–435. https://doi.org/10.1108/JIBR-04-2021-0137
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
