The government of India is taking steps to solve the financial problem of MSMEs. Nitin Gadkari declared that the government will buy 10% bonds of MSMEs that get listed.
The Initiative
Nitin Gadkari, declared that the government will buy 10% bonds of MSMEs, if the small businesses get listed and issue bonds in the capital market. The listing of MSME’s on the stock market will help them in the generation of easy funds. The delayed payment from PSU’s and private companies is making their survival difficult. Also, requested the Finance Ministry to get sanction of Rs 10,000 crore to buy equity in MSMEs listed on the stock market.
The government is also making efforts to get low-cost capital for MSMEs from the Asian Development Bank, World Bank, and German state-owned development bank KfW. The funds will channelize through nationalized banks as well as through all cooperative banks and NBFC’s. He further added that the government is continuously trying to develop backward and rural industry keeping in mind the potential of generating 11 crore employment.
Digital Credit Rating System
To assist in raising funds for MSMEs, the minister also declared establishing a digital credit rating system. He emphasized the importance of credit rating of a business. A digital platform for the same would facilitate the decision of investors. The government is planning policies for executing 10% Bonds of MSMEs who list themselves on stock market.
The ministry is also seeking to create a website that will showcase success stories 100 women entrepreneurs. In an answer to foreign women entrepreneurs looking to start business in India, he said that an Indian partner could handle the regulations in the country more effectively along with benefiting from government schemes and incentives.
Despite the government’s efforts in uplifting the MSMEs, these units still face challenges. MSMEs suffer from lack of access to the marketing platform and shortage of required credit. By purchasing 10% Bonds of MSMEs, the government would help their working capital needs.