CAG Outlines Four Key Measures for MSME Development

On Thursday, the Comptroller and Auditor General of India (CAG) proposed a four-pronged strategy—simplification, digitalisation, decriminalisation, and removal of redundant laws—to support the growth and efficiency of the Micro, Small and Medium Enterprises (MSME) sector.

Addressing a conclave on the ‘Pan-India Horizontal Audit on Ease of Doing Business (EoDB)’ for MSMEs, CAG K. Sanjay Murthy emphasised that the sector plays a vital role not only in driving economic growth, but also in promoting inclusive development, fostering entrepreneurship, strengthening supply chains, and generating employment across both rural and urban regions of India.

He pointed out that excessive regulatory burdens hinder enterprise competitiveness and slow industrial progress, underscoring the need for MSME reforms that cut across all levels of government—Central, State, and local authorities. “The success of these reforms relies not just on policy intentions, but on effective coordination among departments, digital integration, consistent implementation, and feedback from businesses and citizens,” he added.

Mr. Murthy also highlighted that public procurement from MSMEs has risen significantly, illustrating the growing scale and importance of procurement-related compliance audits. He noted that the current MSME audit represents one of the first detailed block-level assessments, with similar thematic audits planned across the country. Ease of Doing Business (EoDB) and Ease of Living have been identified as priority audit themes, spanning departments, regions, and sectors.

The CAG chief emphasised the importance of data-driven auditing and decision-making, stating that reliable data is crucial for effective policy design. “Auditors are encouraged to focus on areas supported by strong data trends, rather than routine compliance checks, and share innovative best practices across States to enhance efficiency and standardisation,” he said.
MSME Secretary S.C.L. Das acknowledged the positive progress made through collaboration between government and industry, which has helped reduce compliance burdens and vulnerabilities for small enterprises. Other speakers included Ministry of Statistics and Programme Implementation Secretary Saurabh Garg and TeamLease Chairman Manish Sabharwal.
 
The Pan-India Horizontal Audit on EoDB for MSMEs represents a key step towards outcome-focused public sector auditing, aligned with national priorities and aimed at improving service delivery. The audit will cover the period from FY2021-22 to FY2025-26, with field audits scheduled under the Annual Audit Plan 2026-27. Coordinated by the Office of the Principal Accountant General (Audit-II), West Bengal, the exercise will involve participation from all State Audit Offices.

The audit will examine relevant Central Ministries, State Departments, district-level institutions, and State Public Sector Undertakings, with findings expected to guide governments in refining reforms, reducing compliance burdens, and creating a predictable, transparent, and supportive business environment. This will enable MSMEs to concentrate on productivity, innovation, and sustainable growth, according to an official CAG statement.