Hi Alex, here is what I understood and why I needed a MANIFEST.in file. 
When the 'qonos' is packaged for installation, it by default includes all the .py files and excludes files with different extension like in our case .cfg. If I want even the .cfg file too be included while packaging, I have to define it in this MANIFEST.in file so that when I do 'python setup.py install' even the .cfg file is included for copying by the setuptools.

As migrate.cfg is a required configuration file for sqlalchemy-migrate, I have to include the file as part of installation through MANIFEST.in file.