The Comptroller and Auditor General of India (CAG) on Thursday proposed a four-point strategy — simplification, digitization, decriminalization and removal of redundant laws — to benefit the micro, small and medium enterprises (MSME) sector.
Speaking at a conclave on ‘Pan-India Horizontal Audit on Ease of Doing Business (EoDB)’ for SMEs, CAG K. Sanjay Murthy said the sector is not only critical for economic growth but also for inclusive development, promoting entrepreneurship, strengthening supply chains and creating livelihoods across rural and urban India.
Stating that excessive regulatory burden hinders business competitiveness and slows down industrial growth, he said that reforms related to MSMEs need to be pushed across multiple ministries and levels of government – Centre, State and local bodies.
“The effectiveness of reforms depends not only on political intent, but also on coordination between departments, integration of the digital system, uniformity of implementation and feedback from citizens and businesses,” he said.
The CAG chief said public procurement by SMEs has seen a large increase, highlighting the scope and importance of compliance audits related to public procurement. “The present MSME audit is one of the first detailed audits at the block level, but similar thematic audits will continue at the national level. EoDB and Ease of Living are priority audit topics for the CAG, covering various departments, geographies (Centre, States, local bodies) and sectors,” Mr. Murthy said.
He said the focus should be on audits and data-driven decision-making as credible data inputs are essential for effective policy formulation. “Government initiatives are showing significant progress, and auditors are being led to focus on areas supported by strong data trends, rather than routine compliance audits alone,” he noted, emphasizing the need to share innovative best practices across states to improve efficiency and standardize similar systems.
MSME Secretary SCL Das highlighted recent positive progress in government-industry collaboration in reducing compliance burdens and vulnerabilities faced by small businesses. Speakers included Statistics Minister and Program Implementation Minister Saurabh Garg and Team Lease Chairman Manish Sabharwal.
The Pan-India Horizontal Audit on EoDB for MSMEs represents an important step towards a results-oriented public sector audit aligned with national priorities and aimed at improving service delivery to MSMEs. The exercise will cover the period 2021–22 to 2025–26, with a field audit planned as part of the 2026–27 annual audit plan. The Audit will be coordinated by the Office of the Accountant General (Audit-II), West Bengal, as the Lead Authority, with the participation of all State Audit Offices.
It will cover relevant Central Ministries, State Ministries, District Level Institutions and State Public Sector Undertakings. Findings from this audit are expected to support governments in refining reforms, reducing compliance burdens and creating a more predictable, transparent and enabling business environment that will enable SMEs to focus on productivity, innovation and growth, the CAG said in a statement.
Published – 29 Jan 2026 22:17 IST
