MSME లకు రుణాలతో ఏ మేరకు రికవరీ? || Will MSME Loans Recover Economy? ||
The Union government said it would provide such businesses an additional and full guarantee of ₹3,00,000 crore in the next five months—about 10 times of what it gave in 2018-19. While a liquidity infusion of that size can significantly help micro, small and medium enterprises (MSMEs) thaw the two-month economic freeze, many of the 63.4 million enterprises in the sector were seeking more.
They were hoping for a cash handout, payment of employee wages, or tax waivers. Instead, the government is telling them to borrow some more, albeit on easier terms, to reboot. But past data on MSME lending suggests three challenges in the government’s biggest measure to revive small businesses.
The first challenge is eligibility. Only a small pool of MSMEs will effectively be eligible for this working-capital facility: those that have existing loans. They can now borrow up to 20% more of their loan outstanding on February 29, 2020. Thus, if a business has a loan outstanding of ₹1 crore, it can borrow another ₹20 lakh. A slide in finance minister Nirmala Sitharaman’s presentation on May 13 stated: “45 lakh units can resume business activity and safeguard jobs".
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MSME లకు రుణాలతో ఏ మేరకు రికవరీ? || Will MSME Loans Recover Economy? || The Union government said it would provide such businesses an additional and full guarantee of ₹3,00,000 crore in the next five months—about 10 times of what it gave in 2018-19. While a liquidity infusion of that size can significantly help micro, small and medium enterprises (MSMEs) thaw the two-month economic freeze, many of the 63.4 million enterprises in the sector were seeking more. They were hoping for a cash handout, payment of employee wages, or tax waivers. Instead, the government is telling them to borrow some more, albeit on easier terms, to reboot. But past data on MSME lending suggests three challenges in the government’s biggest measure to revive small businesses. The first challenge is eligibility. Only a small pool of MSMEs will effectively be eligible for this working-capital facility: those that have existing loans. They can now borrow up to 20% more of their loan outstanding on February 29, 2020. Thus, if a business has a loan outstanding of ₹1 crore, it can borrow another ₹20 lakh. A slide in finance minister Nirmala Sitharaman’s presentation on May 13 stated: “45 lakh units can resume business activity and safeguard jobs".