Syllabus: GS-III: Employment

Why in the news?

The Ministry of Micro, Small and Medium Enterprises (MSME) has sharpened its gender focus in the 2025–26 Gender Budget Statement, raising gender-sensitive allocations from ₹2,466.57 crore (RE 2024–25) to ₹2,821.08 crore (BE 2025–26). The ministry now classifies schemes into Part A (100% benefit to women), Part B (30–99% benefit), and Part C (<30% benefit). This fiscal reorientation signals a deliberate policy push to translate commitments on gender equality into actionable public spending that can expand women’s ownership and participation in one of India’s most employment-intensive sectors.

Why does gender matter for MSMEs?

Micro, small and medium enterprises are central to employment generation, local value chains and inclusive development. Women own roughly 20% of MSMEs in India — an encouraging base but one that underscores huge latent potential. 

Gender budgeting in MSMEs is not only about equity; it is about unlocking productivity, resilience and social returns. Women-owned firms tend to reinvest earnings into family welfare — education, health and nutrition — thus magnifying developmental impact.

What is gender budgeting in the MSME context?

• Definition: Analysing and allocating fiscal resources so that budgetary measures deliver equitable benefits to women and men.
• MSME practice: Schemes and allocations are tagged into Parts A/B/C based on the proportionate benefit to women entrepreneurs and workers; targeted schemes (Part A) are designed exclusively for women.

Key allocations and flagship schemes (2025–26) 

• Total gender-sensitive allocation (MSME): ₹2,821.08 crore (BE 2025–26).
• Part A (100% women benefit): Example — Mahila Coir Yojana; allocation ₹3.59 crore.
• Part B (30–99% women benefit): Major schemes include:
  • PMEGP (Prime Minister’s Employment Generation Programme): ₹862.5 crore — higher subsidy rates and approval priority for women.
  • ASPIRE (Promotion of Innovation, Rural Industry & Entrepreneurship): ₹8.2 crore — incubation and innovation support in rural clusters.
  • SFURTI (Scheme of Fund for Regeneration of Traditional Industries): ₹155.66 crore — supports artisan clusters (handloom, handicraft) employing many women.
  • Khadi Gramodyog Vikas Yojana: ₹200.03 crore — skill and marketing for khadi/village industries where female participation is high.
  • PM Vishwakarma: ₹1,530 crore — support for traditional artisans, many of whom are women (weaving, embroidery, pottery).
  • ESDP (Entrepreneurship Skill Development Programme): ₹38.4 crore — managerial and digital skills training for women.
• Complementary measures: Coir Vikas Yojana, Procurement & Marketing Support, international cooperation for exports and market access.
  

Achievements — what the allocations are achieving

• Increased budgetary focus: Rise in gender-sensitive allocation shows fiscal prioritisation of women’s entrepreneurship.
• Diversity of instruments: Mix of credit, skill training, cluster development and marketing support addresses several constraints faced by women.
• Scale potential: PM Vishwakarma and PMEGP are scaled programmes that can generate mass employment and formalise many micro-enterprises led by women.
  

Remaining constraints

• Access to finance: Women often lack collateral, formal credit history, and face higher transaction costs.
• Informal and micro nature of firms: Smaller scale limits economies of scale, market access and bankability.
• Digital and market access gaps: Low digital literacy and limited e-commerce uptake hinder scaling.
• Social and mobility barriers: Time poverty, caregiving responsibilities and social norms limit market participation.
• Data gaps: Weak gender-disaggregated enterprise data impairs outcome measurement and policy targeting.
• Fragmented support ecosystem: Skill, credit, marketing and regulatory support often operate in silos without convergence.
  

Way forward

1. Finance & credit instruments

• Dedicated credit lines & guarantee funds: A national Women MSME Credit Window with concessional rate and partial credit guarantee to reduce collateral constraints.
• Collateral-free micro-credit scaling: Expand and mainstream successful models of collateral-free lending and group-based credit.
• Outcome-linked seed grants: Small seed grants for prototypes and product development conditional on milestones.
  

2. Market access and procurement

• Mandatory public procurement targets: Enforce and expand reservation/preference to women-owned MSMEs in government procurement.
• Export facilitation: Dedicated export cells, certification assistance and trade fair support targeted at women-led clusters.
  

3. Skills, technology and incubation

• Women entrepreneurship hubs: One-stop hubs at district level providing incubation, legal aid, digital onboarding and market linkages.
• Digital literacy drives: Tailored programmes to raise e-commerce readiness (payments, listings, logistics).
• Mentorship & networks: National mentorship rosters linking experienced entrepreneurs and corporations with women founders.
  

4. Social infrastructure & time poverty

• Childcare & time-use support: Subsidised childcare or community crèches near industrial clusters to free women for productive work.
• Flexible skilling and micro-work opportunities compatible with caregiving roles.
  

5. Data, monitoring & outcome budgeting

• Gender-disaggregated enterprise registry: Strengthen Udyam / MSME databases with sex of proprietor, employment, turnover and access to finance.
• Outcome-based budgeting: Move from input tracking to measurable outcome indicators (jobs created, revenue growth, credit accessed).
• Impact evaluation: Rigorous third-party evaluation (randomised pilots) before scaling new instruments.
  

6. Convergence & institutional architecture

• Single-window “Women MSME Cell”: A nodal centre to coordinate MoMSME, State MSME cells, banks, NABARD, SIDBI, industry bodies and women’s groups.
• Inter-ministerial schemes: Link skill (MSDE), digital (De-itY), rural programmes (MSME+Rural Dev) for coherent delivery.
  

7. Regulatory and enabling reforms

• Simplify registration: User-friendly registration and de-bottleneck compliance for micro women-enterprises.
• Tax & incentive nudges: Time-bound tax credits for women-led startups and scale-up grants for women entrepreneurs in strategic sectors.
  

Conclusion

Gender budgeting in the MSME sector is a necessary but not sufficient instrument for women’s economic empowerment. The 2025–26 Budget marks progress in fiscal signalling and design — but to convert allocations into livelihoods and sustainable businesses, policy must go beyond cheque-writing. It must assemble finance, markets, skills, data and social infrastructure in an integrated delivery architecture that understands women’s realities. Only then will women cease to be marginal beneficiaries and become central drivers of India’s inclusive growth story.

Sample mains question 

“Assess the role of gender budgeting in promoting women’s entrepreneurship in India’s MSME sector. What reforms are needed to translate budgetary allocations into scalable and sustainable outcomes?”

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