Credit and Finance for MSMEs: Rs 6,062.45 crore World Bank assisted central government programme Raising and Accelerating MSME Performance (RAMP) was approved on Wednesday by the Cabinet chaired by Prime Minister Narendra Modi. Finance Minister Nirmala Sitharaman in her budget speech in February had announced the rollout of the programme in the coming five years. According to a Cabinet’s statement, RAMP would commence in the financial year 2022-23. The programme was announced back in 2020 by the government and the World Bank to support Covid-hit MSMEs in their business recovery.
Out of the total outlay, Rs 3750 crore was already approved by the World Bank in June last year under the Credit Linked Capital Subsidy and Technology Upgradation Scheme. Now the remaining Rs 2312.45 crore outlay would be funded by the government.
Moreover, the World Bank in its statement in June last year had said the programme targets improvement in the performance of 5.55 lakh MSMEs. “In addition, expansion of target market to include service sectors and increase of about 70,500 women MSMEs is envisaged,” the Cabinet’s statement added. The initiative will broadly focus on first, strengthening institutional capacity and coordination for MSMEs, and second, supporting MSMEs’ capabilities and access to markets and finance.
In terms of the flow of funds, the capital would be routed through RAMP into the MSME Ministry’s budget against Disbursement Linked Indicators (DLIs) to support the ministry’s ongoing MSME programmes focusing on improving market access and competitiveness.
The DLIs would include first, implementing the National MSME Reform Agenda; second, accelerating MSME sector centre-state collaboration; third, enhancing the effectiveness of the Technology Upgradation Scheme (CLCS-TUS); fourth, strengthening the receivable financing market for MSMEs; fifth, enhancing the effectiveness of Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE); and sixth, reducing the incidence of delayed payments.
The Cabinet said the preparation of Strategic Investment Plans (SIPs) by all states and union territories will also be an important component under RAMP. These SIPs would include an outreach plan for identification and mobilisation of MSMEs, identifying key constraints and gaps, setting milestones; and projecting the required budgets for interventions in priority sectors. These included renewable energy, rural & non-farm business, wholesale and retail trade, village and cottage industries, women enterprises etc.
RAMP’s monitoring and policy overview would be undertaken by an apex National MSME Council headed by the Minister for MSME. Other ministries would also have their representations. Further, there would be a RAMP programme committee to be headed by the MSME Secretary that would monitor the specific deliverables under RAMP. However, for the day-to-day implementation of the programme, there would be programme management units at the national and state levels. These units would comprise professionals and experts selected from the industry to support the ministry and states in implementing and evaluating the programme.
According to the World Bank, RAMP will focus on five first mover’ states – Gujarat, Maharashtra, Punjab, Rajasthan, and Tamil Nadu that are home to reportedly 54 per cent of all registered MSMEs in the country. Moreover, out of around 58 million MSMEs in India, more than 40 per cent lack access to formal sources of finance.
RAMP was launched on the basis of the recommendations from the UK Sinha Committee report in June 2019. The report had suggested multiple regulatory, financial, and implementation reforms for targeted interventions among MSMEs to solve their recognized challenges, the most prominent being lack of access to affordable credit and capacity building.