Budget unveils revamped credit lifeline for MSMEs | Latest News India - Hindustan Times
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Budget unveils revamped credit lifeline for MSMEs

Feb 01, 2023 04:46 PM IST

Overall, the finance minister allocated a record ₹22,138 crore for the MSMEs ministry in the Union Budget 2023-24

Union finance minister Nirmala Sitharaman on Wednesday announced a revamped credit guarantee scheme for 65 million micro, small and medium enterprises (MSMEs), the backbone of Indian manufacturing, with effect from April 1, 2023, a move that is expected to funnel around 9,000 crore into the sector.

The new credit guarantee scheme will lower the cost of credit for MSMEs by 1%. (Representative file image)
The new credit guarantee scheme will lower the cost of credit for MSMEs by 1%. (Representative file image)

Overall, the finance minister allocated a record 22,138 crore for the MSMEs ministry in the Union Budget 2023-24. The allocation for the MSME ministry is higher than the revised estimate of 15,628 crore for the current fiscal year, but lower than its Budget estimate of 21,422 crore, documents showed.

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India’s MSME segment, which accounts for 30% of the country’s GDP and directly employs nearly 110 million people, was hit hard by knock-on effects of the Covid pandemic and the global slowdown.

The new credit guarantee scheme will lower the cost of credit for MSMEs by 1% and will allow MSMEs to avail an additional collateral free credit guarantee of 2 lakh crore.

The budget announced several measures to prop up the MSME sector, including extension of the emergency credit line guarantee scheme till March 31, 2023 and a Raising and Accelerating MSME performance (RAMP) programme with an outlay of 6,000 crore.

Nearly 65% of MSME players in the country had availed benefits under the Emergency Credit Line Guarantee Scheme (ECLGS), according to a recent study by Small Industries Development Bank of India (Sidbi). The study was based on a random sample pool of 1,029 MSMEs across 20 states and two Union territories.

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  • ABOUT THE AUTHOR
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    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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