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The study highlights theimportance of capital budgeting.

Capital Budgeting,mostly defined as a decision-making process that enable manager to estimate andidentify projects that are valuable to the company, is usually the dominant taskfacing any financial manager and his/her team. It is the most important taskfor managers. The study alsoexplains about SME’s in India.

SME sector of Indiais considered as the backbone of economy contributing to 45% of the industrialoutput, 40% of India’s exports, employing 60 million people, create 1.3 millionjobs every year and manufacture more than 8000 quality products for the Indianand international markets. With around 30 million SMEs in India, 12 millionpeople expected to join the workforce in next 3 years and the sector growing ata rate of 8% per year, Government of India is taking different measures so asto increase their competitiveness in the international market. The study alsohighlights Role and importance of SME’s in Indian economy. The small and mediumscale industries are very important to our country in instruct to survive andespecially to those who needs job. The SME’s creates employment invention. Thebasic problem in India is increasing population.

The SME’s helps in generatingemployment. This problem is solved to larger extent by SME’s. The rural andsemi urban areas remain untouched from talent and infrastructure. The SME’shelps in utilising resources. The study also explains about Roleof banks for development of SME’s in India. Thevarious bank loans available to SME’s codes and standards, common rule forlending 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 alsodepends upon various type of industry.  In short,Capital budgeting is most important technique for investment decision.

Thereare 6 types of techniques in capital budgeting i.e. Payback Period, AccountingRate of Return, Internal Rate of Return, Discounted Cash flow, Net PresentValue.

Small and Medium Enterprises plays an important role in growth of theIndian economy. The project gives an overview of capital budgeting techniquesuse in Small and Medium Enterprises, problems faced by SME’s , Role andimportance of SME’s, schemes for Small Enterprises, common guidelines forlending to MSME sector, Banking codes and standards. The reason for SME’s facesthe problem in India is no proper management, no proper procedure, lack ofdiscipline.

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