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Credit Constraints among Unincorporated Enterprises in India: An Empirical Investigation Using Unit-Level ASUSE Data

Author

Listed:
  • Badola, Shivani

    (Institute for Studies in Industrial Development)

  • Mukherjee, Sacchidananda

    (National Institute of Public Finance and Policy)

Abstract

Credit constraints often hinder investment in unincorporated enterprises, limiting innovation and overall performance, including reduced productivity and output, and slower growth. In this paper, we assess credit constraints on unincorporated enterprises using NSSO’s unit-level data from the Annual Survey of Unincorporated Enterprises 2022-23. Identifying the factors and determinants of credit constraints is crucial for informing policy recommendations. Based on sources of outstanding loans and survey responses, we classify enterprises into three categories: fully constrained, partially constrained, and not constrained. We find that manufacturing enterprises face more credit constraints than those engaged in trading and services. Furthermore, the study indicates that female entrepreneurs and those belonging to SC/ST or OBC castes face comparatively greater credit constraints than others. Other factors, such as region (rural vs. urban), size (annual turnover and asset value), GST registration status, price-cost margin, etc., are strong determinants of credit constraints or access to credit.

Suggested Citation

  • Badola, Shivani & Mukherjee, Sacchidananda, 2026. "Credit Constraints among Unincorporated Enterprises in India: An Empirical Investigation Using Unit-Level ASUSE Data," Working Papers 26/449, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:26/449
    Note: Working Paper 449, 2026
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    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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