Comptroller and Auditor General K Sanjay Murthy on Thursday raised significant concerns about the excessive regulatory burdens that are impeding the competitiveness of micro, small and medium enterprises (MSMEs) and slowing down industrial growth across India. Speaking at a gathering of senior officials, Murthy emphasized that reforms for MSMEs must cut across multiple departments and levels of government, including the Centre, state, and local bodies.
Four-Pronged Strategy for MSME Reforms
Murthy outlined a comprehensive four-pronged strategy to address these challenges, which includes simplification, digitalisation, decriminalisation, and the elimination of redundant laws. He stressed that these measures are highly relevant for MSMEs, which form the backbone of the Indian economy. The CAG noted that the effectiveness of reforms depends not only on policy intent but also on coordination among departments, digital system integration, uniformity in implementation, and robust feedback loops from citizens and businesses.
Audit Focus on Ease of Doing Business
The remarks were made during a meeting with senior officials from the Centre and states, representing departments of MSMEs, statistics, and industry bodies such as CII, FICCI, Assocham, Phdcci, and Fisme. This gathering was part of the auditor's consultative process for its ongoing pan-India horizontal audit on ease of doing business (EoDB) for MSMEs. Murthy highlighted that ease of doing business and ease of living have become priority audits for the federal auditor, spanning across departments, geographies, and sectors.
He further explained that while the Centre has initiated a comprehensive effort to promote EoDB through systematic compliance reduction and deregulation, the real test of these reforms lies in their last-mile outcomes. The audit seeks to assess whether systems are delivering what they ought to, Murthy said, underscoring the importance of tangible results for MSMEs.
MSMEs: Critical for Economic and Inclusive Growth
Murthy emphasized the critical role of the MSME sector, stating that it is not only vital for economic growth but also for inclusive development. MSMEs support entrepreneurship, strengthen supply chains, and create livelihoods across both rural and urban India, he noted. The pan-India horizontal audit is designed as an outcome-oriented public sector auditing initiative, aligned with national priorities and focused on improving service delivery for MSMEs.
The audit will cover the period from 2021-22 to 2025-26 and will involve field audits to gather firsthand insights. According to the CAG, the findings from this audit are expected to assist governments in refining reforms, reducing compliance burdens, and fostering a more predictable, transparent, and facilitative business environment. This, in turn, will enable MSMEs to concentrate on enhancing productivity, driving innovation, and achieving sustainable growth.
