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An Economic Analysis of Technical Efficiency of MSMEs in India

Micro, small and medium enterprises (MSMEs) have been the lifeline of the Indian economy. The sector draws significant importance in terms of employment, production, income and export. This is a labour-intensive sector and creates large employment opportunities in India. The sector has the capacity to reduce regional imbalance through income and employment generation and attain self-reliance. After new economic reforms, they have been facing tough competition. The nature of performance and efficiency of the MSMEs are needed to improve to face the competition in the market. This article analyses relative technical efficiencies of registered and unregistered MSMEs of states and union territories in India. Data envelopment analysis (DEA) technique is used to estimate the technical efficiency of the MSMEs. It is a state-wise analysis. This study shows some significant results of the performance and efficiency of MSMEs in India.