Financial management practices of Indian small business units

Abstract

Small Industry Is considered an important vehicle for development of both almost every country in terms of their contribution to the gross domestic product, employment and exports. The economies of countries like Malaysia and Singapore are solely dependent on the growth and contribution of SBUs. For example. in Malaysia. SBUs constitute the majority of all industrial establishments. accounting for atleast one half of industrial employment and value added. In Singapore, SBUs in manufacturing, commerce and the service sector s constitute approximately 87 per cent of business, 42 per cent o f employment, 25 per cent of value added and 16 per cent of direct exports. Even in India, the contribution of SBUs is no less significant. In India, small business units accounted for about 40 per cent of the gross turnover in the manufacturing sector, about 45 per cent of the manufacturing exports and 35 per cent of total exports. SBUs being labour-intensive, are believed to provide more employment and earning opportunities for unskilled worker s. As unskilled workers may often be under employed or unemployed. small scale industry is thus expected to contribute towards reducing poverty and inequality.

An economic constituent of this type needs to be surely car ed for. Every activity of business of these units needs to be closely examined and remedial measures taken. The fact that all is not well with these uni ts has been hightighted very much by the earlier researcher s. Yet, there are a few areas of gap that need to be further examined. It is in this context, the present study is expected to make a contribution to the literature by focussing on the practices of Financial Management.