The Importance of Capital Budgeting: Essay Example, 399 words GradesFixer

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The Importance of Capital Budgeting

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The study highlights the importance of capital budgeting. Capital Budgeting, mostly defined as a decision-making process that enable manager to estimate and identify projects that are valuable to the company, is usually the dominant task facing any financial manager and his/her team. It is the most important task for managers.

The study also explains about SME’s in India. SME sector of India is considered as the backbone of economy contributing to 45% of the industrial output, 40% of India’s exports, employing 60 million people, create 1.3 million jobs every year and manufacture more than 8000 quality products for the Indian and international markets. With around 30 million SMEs in India, 12 million people expected to join the workforce in next 3 years and the sector growing at a rate of 8% per year, Government of India is taking different measures so as to increase their competitiveness in the international market.

The study also highlights Role and importance of SME’s in Indian economy. The small and medium scale industries are very important to our country in instruct to survive and especially to those who needs job. The SME’s creates employment invention. The basic problem in India is increasing population. The SME’s helps in generating employment. This problem is solved to larger extent by SME’s. The rural and semi urban areas remain untouched from talent and infrastructure. The SME’s helps in utilising resources.

The study also explains about Role of banks for development of SME’s in India. The various bank loans available to SME’s codes and standards, common rule for lending MSME sector.

The study highlights various schemes for SME’s. Schemes includes credit linked subsidy scheme for technology up gradation, Quality up gradation for small scale, financial assistance. The scheme also depends upon various type of industry.

In short, Capital budgeting is most important technique for investment decision. There are 6 types of techniques in capital budgeting i.e. Payback Period, Accounting Rate of Return, Internal Rate of Return, Discounted Cash flow, Net Present Value. Small and Medium Enterprises plays an important role in growth of the Indian economy. The project gives an overview of capital budgeting techniques use in Small and Medium Enterprises, problems faced by SME’s, Role and importance of SME’s, schemes for Small Enterprises, common guidelines for lending to MSME sector, Banking codes and standards. The reason for SME’s faces the problem in India is no proper management, no proper procedure, lack of discipline.

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GradesFixer. (2018, December, 17) The Importance of Capital Budgeting. Retrived July 17, 2019, from
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