Covid-hit MSMEs get Rs 6,062 crore boost
The Cabinet has approved $808 million (Rs 6,062 crore) support to revitalize Covid-affected Micro, Small and Medium Enterprises (MSMEs) through a World Bank-backed programme. Of the total aid, Rs 3,750 crore ($500 million) will be in the form of a loan from the World Bank and Rs 2,312 crore will be provided by the government. Support for the Raising and Accelerating MSME Performance (RAMP) program, announced in the FY23 budget, will be extended for five years.
The program aims to improve MSMEs’ access to market and credit while strengthening institutions and governance related to small enterprises at central and state levels. According to the World Bank’s assessment, more than 40% of MSMEs in India do not have access to formal sources of finance.
An official statement after the Cabinet meeting suggests that RAMP will respond to the generic and Covid-related challenges faced by MSMEs by strengthening the impact of existing programs for these entities and improving their competitiveness. Furthermore, the program will build the capacity of MSMEs, improve the skills of employees, help them upgrade technology and adopt a sound marketing strategy, among others.
RAMP is one of the programs announced in the last budget as the government recognized the need for an extended period of relief for start-ups and small businesses as they grapple with the devastation caused by the pandemic.
The government has also offered to extend the validity of its flagship guaranteed loan scheme for one year until March 2023 and expand its coverage from Rs 50,000 crore to Rs 5 trillion. To top it off, the Center will revamp the existing Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) to facilitate additional credit of up to Rs 2 trillion.
The additional credit limit of Rs 50,000 crore from the Enhanced Emergency Line of Credit Guarantee Scheme (ECLGS), however, is to be used to strengthen health infrastructure by lending only to hospitality and related businesses, said Finance Minister Nirmala Sitharaman during the presentation of the Budget.
The government will also link key portals – Udyam, e-shram, NCS and ASEEM – for MSMEs and expand their reach to improve their business prospects.