Narendra Modi to launch MSME sops package today; know all about 100-day 100-district plan

By: | Updated: November 2, 2018 10:28 AM

The development comes amid the ongoing rift between the government and the Reserve Bank of India (RBI) and tepid credit growth of MSMEs is one of the key points of the tussle.

The measures are as part of the government’s efforts to ease liquidity squeeze in the markets. (Representational photo: PTI)

Prime Minister Narendra Modi is expected to announce a slew of measures to boost credit availability to Micro Small & Medium Enterprises (MSMEs), as well as an outreach program for the sector, which will cover 100 districts throughout the country and run for 100 days, according to a report by The Indian Express. As part of the program, to be launched today, various central ministers are expected to visit these districts to inform entrepreneurs on various facilities to be extended to the MSME sector.

The development comes amid the ongoing rift between the government and the Reserve Bank of India (RBI) and tepid credit growth of MSMEs is one of the key points of the tussle. The measures that the government is planning to announce are as part of its efforts to ease liquidity squeeze in the financial markets and provide relief to non-banking financial companies (NBFCs). Credit availability to MSMEs has been affected because of the liquidity crisis being faced by NBFCs, which are major lenders to MSMEs, after banks.

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The government is looking at the measures to boost MSMEs’ access to the market as well as some hand-holding and facilitation support, the sources told the newspaper. The program is expected to provide the much-needed lift to MSMEs, which are the major employment generators across the country and have witnessed slower growth compared with the overall non-food credit growth.

As per the data from the central bank on the deployment of gross bank credit until August -end this year, while credit to the industry has gone up by 1.9% year-on-year, credit to micro to small enterprises has risen 2.6% and to medium enterprises by 6.5%.

Enterprises with revenue of Rs 5 crore are currently termed as microenterprises, while businesses with revenue between Rs 5 crore and Rs 75 crore are small enterprises. On the other hand, enterprises with sales of Rs 75 crore and Rs 250 crore are termed as medium-sized enterprises.

According to the sources, the government may also look at the advancement of capital to banks and is likely to take a call on Friday. While the government is looking at the option of sourcing funding from the central bank, the banking regulator is learnt to be against of the idea of shelling out any portion of reserves for the same.

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