Modelling Growth in Indian MSMEs: An Empirical Approach Using Fixed Effects and GMM Estimator

International Journal of Economics and Management Studies

© 2025 by SSRG - IJEMS Journal

Volume 12 Issue 5

Year of Publication : 2025

Authors : Rohit Ashok Mohite, Ravi Harendra Chourasiya

10.14445/23939125/IJEMS-V12I5P101

How to Cite?

Rohit Ashok Mohite, Ravi Harendra Chourasiya, "Modelling Growth in Indian MSMEs: An Empirical Approach Using Fixed Effects and GMM Estimator," SSRG International Journal of Economics and Management Studies, vol. 12,  no. 5, pp. 1-9, 2025. Crossref, https://doi.org/10.14445/23939125/IJEMS-V12I5P101

Abstract:

Using econometric techniques, this paper investigates the determinants of growth in Micro, Small, and Medium Enterprises (MSMEs) in India. Using a balanced panel dataset of 560 fast-growing Indian MSMEs from 2014–2018, the study employs Fixed Effects (FE) estimation and the Generalized Method of Moments (GMM) to model the relationship between firm growth and various firm-specific and macroeconomic variables. According to the report, macroeconomic factors like inflation and the corporate tax rate, productivity metrics, business size, and internal financing all greatly impact MSME growth. On the other hand, there was little to no statistical relevance between leverage and GDP growth. The results provide policy implications for focused interventions in emerging economies and advance our understanding of the fundamental dynamics of MSME development.

Keywords:

MSMEs, Growth Determinants, Panel Data, Fixed Effects, GMM Estimation, Indian Economy.

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