Credit flows to COVID hit MSMEs as the disbursement under Rs 3 lakh crore collateral-free scheme jumps 1341 per cent. Here is how MSMEs’ revival plan post-COVID-19 lockdown is working.
Sanctions of 1.14 Lakh Crore Loans Under ECLGS
The Finance Ministry has sanctioned loans of about Rs 1,14,502 crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme. However, only Rs 56,091.18 lakh crore has been disbursed till July 4. Including disbursements from 12 public sector banks (PSBs), 20 private sector banks, and ten non-banking financial companies (NBFCs).
Further, there has been an increase of Rs 4,158.51 crore in the cumulative amount of loans sanctioned by PSBs and private sector banks on July 4 as compared to July 1. The scheme is the most significant financial package of the ‘Aatmanirbhar Bharat Abhiyan’ for MSMEs. While Maharashtra units have got the highest amount of loans (Rs 6,856 crore), Tamil Nadu got sanctions of Rs 6,616 crore loans.
Though ‘Make in India’ has been going on for over five years now, it is the first time that the government has backed the plan with the supply of funds and resources. The current push for ‘Make in India’ can prove an opportunity for the MSMEs in utilizing the scale of economies.
Several schemes like Fund of Funds and financial packages announced by the PM in reviving the units from the effect of the pandemic driven lockdown can go a long way in improving the condition of MSMEs. On the other hand, MSMEs must also leverage this opportunity and capitalize themselves to become self-reliant. They should build a long-term plan based on achieving sustainability and becoming crisis-proof in the long run.
99% Businesses in India Now Fall Under MSME Category
The change in the definition of MSMEs has brought 99% of businesses in India under the MSME category. Now, an entity is micro if it has investment up to 1 crore and turnover less than five crores. Similarly, the investment and turnover limits for small are Rs 10 crore and Rs 50 crore. For medium enterprises, it is Rs 50 crore and Rs 250 crore respectively. The change will enable them to get various sops such as concessional finance. However, the units have lost the benefit of excise duty relief.
In all, the implementation of various schemes by the government will not only help revive MSMEs but will also make them self-reliant.