According to the Economic Survey 2017-18, data on credit disbursed by banks shows that out of a total outstanding credit of Rs 26,041 billion as in November 2017, 82.6% of the amount was lent to large enterprises and MSMEs got only 17.4 % of total credit.
It is an established fact that MSMEs in India not only contributes significantly to the country’s GDP, but also generates large scale employment across the nation. Yet, the stubborn stumbling blocks hindering the sector’s progress still seem to be deterring its path to growth. The Economic Survey 2017-2018 clearly shows MSMEs are handicapped by a dearth of credit to expand their businesses according to economictimes.indiatimes.com.
Contributing 32% to the country’s Gross Value Added (GVA), MSMEs also pave the way for industrialisation in rural and backward areas. Why the disbursement of credit is significant is because according to the National Sample Survey (NSS) (2015-16) there are 633.8 lakh unincorporated non-agriculture MSMEs that are also providing employment to 11.10 crore workers in the country, but the percentage or credit they receive is not in commensurate.
As the Economic Survey states in detail, the major schemes implemented for the development of MSME sector are:
i. Prime Minister’s Employment Generation Programme (PMEGP) is aimed at generating self-employment opportunities by establishing micro-enterprises in the non-farm sector by encouraging and assisting traditional artisans and unemployed youth.
ii. Credit Guarantee Scheme for Micro and Small Enterprises covers collateral free credit facility (term loan and/or working capital) extended by eligible lending institutions including Non-Banking Financial Company (NBFC) to new and existing micro and small enterprises up to Rs 200 lakh per borrowing unit quoted that economictimes.indiatimes.com.
iii. Credit Linked Capital Subsidy Scheme (CLCSS) aims at facilitating technology upgradation of the MSME sector.
iv. The Government has also initiated the Pradhan Mantri Mudra Yojana for development and refinancing activities relating to micro industrial units. The purpose of Micro Units Development and Refinance Agency (MUDRA) is to provide funding to the non-corporate small business sector.
