As the majority of India's micro, small and medium enterprises (MSMEs) continue to face debt and late payments, around 90 percent are confident about the Indian economy in 2024, according to a study by NeoGrowth, an MSME-focused non-banking finance firm (NBFC).

The MSME Business Confidence Study found that about 91 percent of MSMEs expect an increase in profits and 82 percent plan to harness the power of online tools in 2024. She added that over 40 percent of MSMEs benefited from government programs in 2023. with MSMEs in manufacturing and wholesale trade being the biggest beneficiaries

Arun Nayyar, Managing Director and Chief Executive Officer (CEO), NeoGrowth, said: “Similar to 2023, MSMEs continue to exude optimism in India’s business environment. From steady profit growth to expansion plans, their confidence paints a vivid picture of the country's economic growth prospects in 2024. India's small businesses will continue to be at the center of India's growth story.”

Optimism for India's economy in 2024

MSMEs in the wholesale/trading sector are leading the way in economic optimism with an overwhelming 95 per cent of respondents confident that India will embark on a robust growth path in 2024. Supportive government policies and regulations coupled with robust domestic and global demand further fuel the sector's unwavering optimism.

Retail MSMEs are very optimistic as 94 percent of MSME retailers expect profits to increase in 2024. Additionally, 58 percent of MSMEs in the retail/wholesale segment expect profits to increase by over 30 percent.

Regarding consumer demand in 2024, the study found that 75 percent of MSMEs in the wholesale and commercial segment remain optimistic about consumer demand in 2024, reflecting the optimism of 2023. In terms of locations, Delhi is the most optimistic with a whopping 87% of MSMEs surveyed expecting an increase in consumer spending. Bangalore and Pune follow with impressive confidence.

The high need for credit will remain in 2024

Almost 60 percent of companies in all sectors assume that they will need loans in 2024. The wholesale/trade and services sectors are expecting the highest demand, with a whopping 64 percent of companies seeking loans to boost their operations. In particular, demand for loans appears to be strongest in metropolitan cities such as Bangalore (88 percent), Pune (87 percent) and Delhi (84 percent).

The three most important factors to consider when choosing a lender in 2024 would be quick disbursements, digitized credit history and contract terms.

Most MSMEs in Delhi would opt for a lender with a digital loan process, while MSMEs in Pune prefer loan providers with quick approvals and disbursements.