THE PERFORMANCE OF MSMES DURING PRE AND POST IMPLEMENTATION OF GST

Abstract

Micro, Small, and Medium Enterprises (MSMEs) sector in India has a special significance for the
economy in terms of wealth creation and employment generation. This sector is expected to offer
more employment opportunities by 2020. It has become an important component of the Indian
Government’s flagship programs such as ‘Make in India’ and ‘Skill India’. The advent of Goods and
Service Tax (GST) posed a serious challenge to the consequent performance of MSMEs in particular
and the economy in general. The ambiguity over the GST is continuing even after two years of its
implementation. Many researchers are of the opinion that the introduction of GST brought about a
fresh wave of challenges particularly in the informal sector. Non-preparation for the perfect launch,
poor infrastructural facilities and delays in receiving Input Tax Credit directly affected the MSMEs
sector. Further, the advent of GST also affected logistic management to a great extent where small
traders acted as suppliers of raw material to big business houses. Some researchers have opined that
GST has left a positive impact on the performance of MSMEs in terms of ease of doing business, tax
reduction on new business, improvement of both logistic and transport services, and elimination of the
difference between goods and services. In this paper, an earnest attempt is made to analyze the impact
of the introduction of GST on the performance of MSMEs in the Indian Economy. The study is
divided into three sections. Introduction, review of literature, objectives, and research methodology
are discussed in the first section. The performance of the MSMEs during pre and post introduction of
GST is reported in the second chapter. The last chapter ends with the summary and the conclusion of
the study.
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