Micro, small, and medium enterprises (MSMEs) account for a sizable portion of all businesses globally, and they significantly boost economic growth. MSMEs act as a primary driver for job creation and a key contributor to GDP growth. It contributes more than 29% of the country’s GDP. Financial literacy can play a critical role in the building of MSMEs and enrich potential entrepreneurs in strengthening money management skills and sustainability. Financial literacy is part and parcel of carrying on MSMEs’ business activities smoothly. The present study examines the financial literacy levels and the impact of MSMEs in India at large and north-eastern states in particular. Sources of data are based on secondary data. The overall average financial literacy in the north-eastern states is high as compared to the national standard, with 33 percent and 27 percent. The study found that out of the total eight north-eastern states, only 37.5 percent are having a financial literacy rate above the national average and the majority of the regions remain at the bottom level. The study reveals that the share of MSMEs in all India GDP has moderately increased but not consistently over the years. India's rural and urban sectors both employ 51 percent and 49 percent of the country's total workforce, respectively. There is a handsome amount of budget allocation for the Northeast region yet the allotted money is underutilized, according to the findings. The study made a point in the concluding remark that a higher degree of financial literacy complements the effectiveness of MSMEs’ growth.