Youth Entrepreneurship

India’s MSMEs Problem Is Not Credit, It’s Cash Flow!

Leave a Comment / Indian Economy, Public Policy, State Economies, Youth Entrepreneurship /

India’s MSMEs Problem Is Not Credit, It’s Cash Flow! India’s MSMEs Problem Is Not Credit, It’s Cash Flow! Sivakumar Chockalingam August 29, 2026 Indian Economy, Public Policy, State Economies, Youth Entrepreneurship Why MSMEs reforms matter — and why TReDS could be the missing link between sales and liquidity? India’s MSME challenge is often described as a credit-access problem. Increasingly, it should be understood as a cash-flow architecture problem. Credit can finance growth. Small businesses often lack collateral, have limited financial histories and face higher borrowing costs. But a more fundamental problem is receiving payment for work already completed. For many micro and small enterprises, the most important source of working capital is not another loan. It is the timely realisation of their receivables. The scale of the problem is significant. The Economic Survey 2025-26 estimates that around Rs.8.1 lakh crore are locked in delayed payments to MSMEs. The Survey notes that delayed payments particularly affect micro-suppliers, constraining liquidity and growth. It also identifies the expansion of TReDS (Trade Receivables Discounting System) and digital invoicing as important interventions in addressing the problem. TReDs /Domestic Trade Exchanges system are regulated by RBI through the Receivables Exchange of India Ltd. A small supplier may hesitate to pursue a delayed-payment claim against a major customer because the customer may also be its most important source of future business. The Economic Survey explicitly recognises this tension: MSMEs may fear damaging commercial relationships by taking formal legal action. This is one reason why faster, lower-cost and less adversarial dispute resolution matters. Further, the Union Ministry of MSME’s Annual Report-2025-26 provides another indication of the enforcement gap. As on 31 December 2025, 2,56,892 applications had been filed on the MSME Samadhaan Portal, involving Rs.55,244.31 crore. Of these, 53,911 cases had been disposed of by MSEFCs, involving Rs.14,638.38 crore. At the same time, 52,744 applications involving Rs.8,397.25 crore were still awaiting review. These figures do not capture the entire universe of delayed payments — the Economic Survey’s Rs.8.1 lakh crore estimate is much broader — but they demonstrate how difficult it can be for an MSME to convert a payment claim into actual cash. The issue is not merely financial. It is behavioural. This is why the delayed-payment provisions and the growing role of the Trade Receivables Discounting System (TReDS) deserve to be viewed together. The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026, passed by Parliament on 7 August 2026, could represent a meaningful shift from simply expanding credit to strengthening the cash-flow architecture around MSMEs. The latest amendment attempts to strengthen the systemic issues. It provides for Online Dispute Resolution, introduces timelines for mediation and arbitration, and strengthens enforcement of mediated settlements and arbitral awards. If an application to set aside an award remains pending for more than six months, courts are mandated to order payment of at least 50% of the awarded amount to the micro or small enterprise supplier. Awards and mediated settlements can also be recovered as arrears of land revenue through the appropriate authority. These provisions matter because a legal entitlement has limited economic value if the enterprise cannot survive long enough to realise it. But enforcement after a payment default should be the second line of defence. The more important policy objective should be to make delayed payments less damaging in the first place. This is where TReDS becomes strategically important: TReDS effectively allows an eligible MSME receivable to become a source of liquidity before the buyer’s contractual payment date. An invoice accepted by the buyer can be discounted through an RBI-regulated platform, with financiers competing to fund the receivable. The MSME receives cash earlier while the buyer continues according to the agreed payment cycle. The scale-up has been striking. According to the Ministry of MSME, invoice discounting on TReDS has increased from about Rs.40,000 crore in 2022-23 to Rs.3.47 lakh crore in 2025-26. In July 2026, the Union government also notified that all operating Central Public Sector Enterprises must route settlement of invoices for goods and services procured from MSMEs through TReDS platforms. TReDS system can turn verified receivables into liquidity. Credit institutions can increasingly use such data to understand the underlying quality of a business. The next logical step is to connect these pieces into a coherent MSME cash-flow ecosystem. For policymakers, therefore, the question should not be simply how much additional credit can be made available to MSMEs. It should also be: how much of the MSME’s existing economic value is trapped because payment does not arrive on time? A business that has already delivered Rs.1 crore of goods or services does not necessarily need another Rs.1 crore loan. It may need its Rs.1 crore receivable to become liquid. That distinction is important because borrowing to compensate for delayed payments can increase leverage and financial costs. If receivables can instead be financed competitively and transparently, the enterprise can maintain production, pay employees and suppliers accept new orders and grow without repeatedly refinancing the same working-capital gap. Yet TReDS system should not become an excuse for buyers to routinely extend payment cycles. Invoice discounting solves the liquidity problem; it does not fully solve the underlying payment-discipline problem. It is also not mandatory for private sector vendors. The policy objective should therefore have two layers. First, make timely payment the norm through stronger disclosure, enforcement and institutional accountability. Second, provide efficient receivables financing when payment cycles create unavoidable working-capital gaps. This is particularly relevant for states such as Tamil Nadu, where millions of MSMEs (are deeply embedded in industrial supply chains — from engineering and auto components to textiles, food processing and a wide range of services, etc. The effectiveness of the national reforms will ultimately depend on adoption at the state and cluster level, including awareness among smaller enterprises and participation by buyers, banks and financiers. Therefore, the 2026 MSMEs reforms are therefore important not simply because they amend a 20-year-old law. They bring together three pieces of a larger policy puzzle: faster dispute resolution, stronger recovery

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Understanding the Power of Money Before Chasing Wealth

Leave a Comment / Public Finance, Public Policy, Skills Development Sector, Youth Entrepreneurship /

Understanding the Power of Money Before Chasing Wealth Understanding the Power of Money Before Chasing Wealth Sakthi Sanjay Kumar July 29, 2026 Public Finance, Public Policy, Skills Development Sector, Youth Entrepreneurship “Money is not merely a medium of exchange; it is a force that shapes our choices, opportunities, and the direction of our lives.” “Money should never control our lives; instead, we must learn to manage money with wisdom, discipline and purpose. That is the true foundation of lasting wealth, financial freedom and a prosperous future.” Money- More Than Income, A Fundamental Life Skill In today’s rapidly evolving world, money has become one of the most influential forces shaping human life. From basic necessities such as food, education, healthcare, housing and transportation to higher education, entrepreneurship, family security and retirement planning, almost every major life decision has a financial dimension. Yet, the true value of money does not lie merely in earning it; it lies in understanding how to manage it wisely and responsibly. Many people believe that earning a high income automatically guarantees a successful and secure life. A well-paid job, an international career and a luxurious lifestyle are often seen as symbols of achievement. However, economic reality tells a different story. History has shown that many high-income earners have faced financial difficulties because of poor financial decisions. At the same time, countless individuals with modest incomes have built lasting wealth through disciplined saving, thoughtful investing and responsible financial management. This highlights an important truth: our financial future is determined not by how much we earn, but by how effectively we manage what we earn. Another important question is pertinent to ask: Is a good job alone enough to guarantee financial security? Many still assume that securing a government position or a high-paying corporate job is the ultimate solution to financial stability. However, the rapidly changing global economy has challenged this belief. The COVID-19 pandemic served as a powerful reminder of this reality. Thousands of well-paid professionals lost their jobs, while many businesses struggled or shut down completely. Those who had emergency savings, maintained financial discipline and planned their expenses carefully were better prepared to navigate the shocks and crisis. Others found themselves facing debt and financial uncertainty. Therefore, employment should be viewed as the beginning of financial independence—not its destination. Long-term financial security requires disciplined saving, informed investing, continuous skill development and the willingness to build multiple sources of income. These are the foundations of sustainable financial well-being. Financial Literacy- An Essential Life Skill for Everyone In today’s dynamic economy, earning a higher income alone is no longer a reliable measure of financial success. What truly determines long-term financial stability is the ability to manage income wisely. This is where financial literacy becomes indispensable. Financial literacy is not merely about saving money; it is the ability to understand income, expenditure, savings, investments, debt, taxation and inflation, and to make informed financial decisions based on this knowledge. Although modern education equips students with academic knowledge across various disciplines, it often overlooks one of the most practical skills required in everyday life—personal financial management. Topics such as budgeting, emergency funds, long-term investing and retirement planning receive little attention in formal education. As a result, even individuals with respectable incomes may struggle financially due to poor financial planning and impulsive decisions. The rapid growth of digital banking, online payment systems, investment platforms and financial technology has created unprecedented opportunities for individuals to manage their finances. At the same time, these developments have increased the complexity of financial decision-making. Without adequate financial knowledge, people may fall into unnecessary debt, become victims of financial fraud or make investment decisions that jeopardise their future financial security. For young people, financial literacy should begin with their very first income. Developing the habit of preparing a monthly budget, saving a fixed portion of earnings, building an emergency fund, and carefully evaluating investment opportunities can provide long-term financial stability. These habits are not simply techniques for managing money; they are life skills that promote responsibility, confidence and financial independence. Financial literacy is not a privilege reserved for the wealthy. It is equally important for students, young professionals, entrepreneurs and families. A financially informed society is better equipped to withstand economic challenges, reduce financial stress and contribute to sustainable economic development. Therefore, integrating financial literacy into everyday learning is no longer an option—it is a necessity for building a secure and resilient future. How Money Influences Decision Making? Money is far more than a medium of exchange; it has a profound influence on the way people think, make decisions and shape their future. An individual’s income, savings, debt and overall financial condition affect not only personal choices but also family well-being, career aspirations and long-term goals. In many ways, financial decisions quietly influence almost every stage of life. In today’s revolutionised digital era, social media has significantly transformed consumer behaviour. Constant exposure to luxurious lifestyles, expensive gadgets, premium cars and designer brands often creates pressure to maintain a similar standard of living. As a result, many people spend beyond their means, prioritising appearances over financial security. This pattern frequently leads to excessive borrowing, reduced savings and long-term financial stress. One of the greatest challenges in personal finance is distinguishing between needs and wants. While needs are essential for survival and well-being, wants are often driven by emotions, trends or social expectations. Developing the discipline to make this distinction is one of the most valuable financial skills an individual can acquire. Wise financial decisions are rarely based on impulse; they are built on planning, patience and long-term thinking. True financial progress is not measured by the amount of money one earns but by the ability to use that money responsibly. Maintaining a realistic budget, saving consistently, investing prudently and avoiding unnecessary debt are the pillars of financial well-being. These habits not only strengthen personal finances but also provide peace of mind during periods of economic uncertainty. Financial freedom does not necessarily mean becoming wealthy. Rather, it is the

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Reward Citizens to Bring a Paradigm Shift in Civic Behaviour

Leave a Comment / Public Policy, Urban Development, Youth Entrepreneurship /

Reward Citizens to Bring a Paradigm Shift in Civic Behaviour Reward Citizens to Bring a Paradigm Shift in Civic Behaviour Prayaga Venkata Rama Vinayak October 13, 2025 Public Policy, Urban Development, Youth Entrepreneurship India is known for its rich cultural practices, family values, hospitality, and ethics. It was an economic superpower for over a millennium and is on the verge of regaining its rightful stature soon. One of the major bottlenecks in the development of our country is the lack of good civic sense among Indians. Despite improvements in literacy and enrollment in higher education, unfortunately, there has not been any perceptible improvement in the civic sense of the public. As per the latest Swachh Survekshan Report (2024-25), not even a single city from Kerala, one of the most literate states in India, is ranked among the top 50 cities. Mattanur, the top-ranked city in Kerala, is ranked 53rd nationally, followed by Alappuzha at the 80th position. Furthermore, organising awareness campaigns alone is hardly effective without decentralization and community-driven efforts at the local level. The NITI Aayog report on ‘Reforms in Urban Planning Capacity in India’, released in 2021, mentioned that during the period 2011–2036, urban growth would account for 73% of the total population increase. There is a saying my father often quotes: “We can wake up someone who is in a deep sleep, but we can never wake up someone who is pretending to be asleep.” The awareness campaigns are beneficial to someone who is unaware of their wrongdoing. These campaigns help them understand and rectify their mistakes, but in our country, that’s not the case. We can relate the above-mentioned findings to the recent Gross Domestic Behaviour Survey by India Today (2025). The Survey presented a few statements to the respondents from 21 states and 1 union territory, requesting them to either agree or disagree with the statements. Based on the responses, the States were ranked. The statements were broadly categorized in the following themes: “Civic Behaviour”, “Public safety”, “Gender attitudes” and “Diversity & discriminations”. Under the Civic Behaviour theme, Tamil Nadu secured 1st place followed by West Bengal, Odisha, Delhi and Kerala in 2nd, 3rd, 4th and 5th places respectively. In the remaining 3 themes, “Public safety”, “Gender attitudes” and “Diversity & discriminations” Kerala secured the 1st place. In overall rankings too, Kerala secured 1st Place in the Gross Domestic Behaviour survey. Under the Civic Behaviour theme, the survey asked the respondents to agree or disagree with the following statement: “It is ok to throw litter on the road/public place, if there is no public garbage bin available”.  Almost 99% of respondents in Kerala either strongly or somewhat disagreed with the statement, helping the state secure the first position for the statement. This clearly indicates that people are well aware that throwing litter on the road is wrong, which is actually a matter of common sense. Yet not even a single city in Kerala featured among the top 50 places in Swachh Survekshan, demonstrating that awareness alone does not guarantee responsible civic behaviour. While strict measures such as bans and prohibitions may be very effective in certain cases, they are not as sustainable as the efforts driven by voluntary participation. Hence, there is a need to promote and ensure the active involvement of citizens in civic matters. China is a case in point, having figured out that the antidote for irresponsible civic behaviour is decentralization and community participation. The country has achieved significant results through its community-based governance. At the neighbourhood committee levels, residents participate in committees that handle disputes, cleanliness and local events. It also employs other measures like Civilized City Rankings, social credit rewards, and public shaming for civic violations. Though Kerala is renowned for its decentralization, it lacks behavioural governance tools like China’s reward – punish civic systems that transform awareness into actions. It is high time we adopt a pragmatic citizen-reward mechanism to encourage better civic sense among our youth and the general public. For example, governments could introduce a “Good Citizen Card (GCC)”. This GCC could be awarded to individuals who pay loans, electricity bills, and property taxes on time; follow traffic rules properly; have no criminal records, especially against children, parents, women, or the elderly; refrain from creating public disturbances; and maintain public hygiene. Additionally, the GCC could include parameters related to education, health, environment, skill development, cultural values, and other aspects that promote responsible citizenship. An autonomous body could be tasked with implementing this citizen-reward initiative to ensure transparency and neutrality. Governments could incentivise the holders of GCC with various benefits, such as preferential allocation of seats in trains, priority or relaxation in cooking gas connection, electricity connection, property registration, or other services. The governments could also consider holding of GCC a prerequisite for government jobs at all levels. It is pertinent to note the similar initiative of the Indian Railway—Lucky Yatri Yojana—a privately sponsored initiative that turned every valid train ticket into a lottery entry, offering daily cash prizes of Rs. 10,000 and a weekly jackpot of Rs. 50,000 to incentivize commuters to travel with a ticket and curb fare evasion. Though the scheme did not take off as intended, the takeaway from the scheme is that incentives encourage people positively. Governments can formulate a robust rewarding mechanism to improve civic sense of our citizens, in addition to the existing stringent laws. The Union Government, in its Budget for 2025-26 has announced the setting up of “Urban Challenge Fund”, wherein “the Government will set up an Urban Challenge Fund of Rs.1 lakh crore to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’.” For the current year, the Union Government allocated Rs. 10,000 crore under the proposed Fund. The government could implement a citizen-reward initiatives, such as GCC, under this Fund and encourage responsible civic behaviour from its citizens. The Author is Public Policy Fellow at AgaPuram Policy Research Centre, Erode The views expressed by the author are personal and does

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Entrepreneurial Biases and Resilience: Building Sustainable Start-Ups

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Entrepreneurial Biases and Resilience: Building Sustainable Start-Ups Entrepreneurial Biases and Resilience: Building Sustainable Start-Ups Dr Anbu Selvi S September 29, 2025 Youth Entrepreneurship Resilience is the ability of a business to withstand, adapt, and thrive in the face of shocks that are internal and external, as well as known and unanticipated. (Pixabay) India’s Growing Start-up Ecosystem Entrepreneurship has reemerged as one of the foremost drivers of economic growth in India during the 21st Century. With nearly 1.92 lakhs recognized start-ups and a rapidly expanding community of young innovators, India now stands as the world’s third-largest start-up ecosystem. This growth has been fostered by government initiatives designed to nurture entrepreneurial skills and resilience from the grassroots to higher education. Programmes like the School Innovation Development Programme (SIDP) encourage creativity and problem-solving among young learners, while Innovation and Incubation Centers (IICs) at universities and colleges provide critical platforms for transforming ideas into viable ventures through mentorship and industry connections. These efforts have laid the foundation for a dynamic entrepreneurial culture capable of driving progress across diverse sectors such as technology, healthcare, and agriculture. The Psychological Journey of Entrepreneurship However, entrepreneurship is not simply a matter of having the right idea or sufficient capital. It is a profoundly psychological journey fraught with uncertainty, volatility, and social pressures. Research shows that many promising start-ups fail not because of a lack of innovation or resources but due to cognitive and psychological biases that distort how entrepreneurs assess risks, make decisions, and respond to failures. Recognizing and managing these biases is essential to fostering resilience, i.e., the capacity to adapt, recover, and sustain momentum despite setbacks.  Biases Across the Entrepreneurial Lifecycle  Entrepreneurs are subject to different biases throughout the lifecycle of their ventures. Before launching, many face pre-entry biases such as fear of failure, doubts about their readiness, or an overemphasis on resource scarcity, which discourage participation in entrepreneurial activities. During the execution phase, overconfidence and distorted optimism often lead founders to overlook risks or ignore warning signs. When ventures fail, entrepreneurs may succumb to stigma, regret, or pessimism, preventing them from learning from their experiences and trying again. Even after success, biases such as complacency and social pressure to scale quickly can jeopardize long-term sustainability.  The Complexities of Entrepreneurship in the Digital Era  In today’s digital era, entrepreneurship is both empowered and complicated by technology. Digital platforms provide unprecedented access to markets and resources, but also amplify biases such as herd mentality and fear of missing out (FOMO). Social media algorithms often reinforce confirmation biases by highlighting positive signals while filtering out critical feedback, leading entrepreneurs to overvalue hype and short-term growth. High-profile cases of rapid valuation collapses among unicorns like Byju’s illustrate the dangers of prioritizing scale over sustainability. Hence, critical digital literacy becomes a vital skill, enabling entrepreneurs to discern between genuine opportunities and transient trends, and to build ventures that endure beyond viral success.  The Case Studies of Post-Failure Biases To understand how psychological biases shape entrepreneurial resilience after failure, the following real-life case narratives offer concrete insights. These examples reveal how entrepreneurs internalise setbacks and develop specific cognitive distortions that influence their future decisions and behaviours. Case Study-One: an entrepreneur who faced repeated failures in multiple small ventures during the early 1990s, illustrates self-attribution bias and regret aversion. Despite eventually achieving long-term success in the media industry (cable television), in his early losses led to deep-seated self-doubt and a tendency to attribute success to luck rather than skills. This also resulted in status quo bias and pessimism bias, making him overly cautious about new opportunities. Case Study-Two: a textile trader, experienced betrayal aversion after being deceived by a co-founder who embezzled funds. Though he recovered financially with a new garment business, his outlook became defined by confirmation bias and generalization bias, where mistrust toward one partner extended to all future collaborators. His heightened protective instincts also led to overcompensation bias, creating rigid systems that stifled flexibility and growth. Case Study Three: a garment exporter in Tiruppur, represents the psychological toll of external shocks like the COVID-19 pandemic. His experience highlights normalcy bias, optimism bias, and illusion of control, as he underestimated the long-term impact of the pandemic and overestimated his ability to manage macroeconomic forces. Even as his business began recovering, complacency bias returned, leaving him vulnerable to future disruptions. These narratives underscore that entrepreneurial failure is not merely a financial even, as it becomes a deeply psychological experience. The nature of the failure, be it self-inflicted, relational, or circumstantial, shapes the type of bias that may emerge. Recognizing these patterns is crucial for designing interventions that help entrepreneurs rebuild not just their ventures, but also their confidence, mindset, and decision-making frameworks. Policy Interventions for Resilience and Sustainability: The following recommendations may be adopted in the higher educational institutions to foster: Pre-Entry Support: Role-model campaigns (e.g., showcasing women like Falguni Nayar of Nykaa), micro-seeding grants, and student innovation programmes to reduce fear and stigma. Resilience Training: Embedding coping strategies, mindfulness, and reflective practices in incubation curricula. Post-Failure Support: Second-chance finance (like Mudra loans), peer-support clinics, and counseling networks. Post-Success Awareness: Structured mentorship for scaling responsibly, preventing overconfidence traps. Inclusive Ecosystems: Gender-sensitive incubators (such as Her&Now by GIZ), rural accelerators, and equitable policy support. Well-Being Support: On-campus psychologists and behavioural mentors in IICs. Ethics and Sustainability: Embedding Environmental, Social, and Governance (ESG) and case studies of responsible start-ups like SELCO Solar (affordable renewable energy for rural India). Conclusion Entrepreneurship is as much a psychological journey as it is a financial and technical one. Biases, if unmanaged, distort decision-making and weaken resilience. By embedding resilience training, ethical awareness, and mental well-being support into education and incubation systems, India can create entrepreneurs who adapt and innovate. Normalising failure (as in Paytm’s founder’s journey), celebrating sustainable models (like SELCO and Phool), and institutionalising second-chance mechanisms will empower entrepreneurs to take risks in healthier and more sustainable ways. Ultimately, the entrepreneurs who will build enduring ventures are not those who avoid bias or failure, but

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