MSME SECTOR IN INDIA

  • According to a report from TransUnion Cibil and Small Industries Development Bank of India (SIDBI), there has been a growth in the credit outstanding amount of Micro, Small and Medium Enterprise (MSME) sector to Rs 20.21 lakh crore, with a year-on-year growth rate of 6.6%.
  • Even according to the Reserve Bank of India (RBI), credit growth to micro and small industries accelerated to 6.4% in June 2021, compared to a contraction of 2.9% in 2020.

Small Industries Development Bank of India

  • SIDBI set up in April 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for Promotion, Financing and Development of the MSME sector as well as for coordination of functions of institutions engaged in similar activities.
  • TransUnion CIBIL Limited
  • It is a credit information company operating in India. It maintains credit files on 600 million individuals and 32 million businesses.

Important points:

  • In Financial Year (FY) 2021, the country disbursed loans worth Rs 9.5 lakh crore to MSME sector, higher than preceding year of Rs 6.8 lakh crore in FY 2020.
  • MSME credit outstanding has grown by 6.6% in March’21, with the micro segment growing the fastest at 7.4%
  • Micro segment was followed by the small segment at 6.8% and medium segment at 5.8%.

Reason for Growth:

  • The rise in credit offtake by MSMEs is due to a host of government initiatives like the Emergency Credit Line Guarantee Scheme (ECLGS) to tackle the economic downturn created by the Covid pandemic.
  • ECLGS scheme was launched as part of the Atmanirbhar Bharat Abhiyan package announced in May 2020 to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially MSMEs
  • It’s objective was to support small businesses struggling to meet their operational liabilities due to the imposition of a nationwide lockdown.
  • Recently, the government has widened its scope to new sectors, including hospitality, travel and tourism.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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