Article
Enhancing the Financial Viability of Environment Sustainable Government (ESG) Bonds for MSME and SME in India - An Empirical Analysis
This study investigates the financial viability, awareness, and adoption drivers of Environmental, Social, and Governance (ESG) bonds among Micro, Small, and Medium Enterprises (MSMEs) in India. Employing a mixed-methods empirical design, the research integrates a comprehensive review of 103 secondary papers with primary data from 150 MSMEs nationwide. Utilizing stratified random sampling by size, sector, and region, with a 40% geographic focus on Karnataka, the study combines quantitative questionnaires on adoption metrics with qualitative interviews detailing financial viability, cost of capital, and expected ROI. The analysis reveals a severe "cost-of-capital viability trap": firms with high baseline borrowing costs (9.21%) are mathematically deterred from adopting ESG bonds compared to early adopters (7.97%). Logistic regression demonstrates that financial knowledge out-predicts firm size, proving that properly informed Micro and Small enterprises exhibit a high propensity to adopt sustainable debt. However, the data exposes a systemic, size-agnostic awareness gap. The primary barriers are operational, specifically complex issuance procedures and fragmented policy transmission, leaving 55% of firms in a complete "support void." Concluding that ESG bonds currently function as a financial luxury, the paper recommends direct process subsidies and a lightweight, MSME-specific ESG taxonomy to democratize sustainable finance.