NEW DELHI: The cental government is mulling extending the interest subvention scheme for MSMEs by another six months beyond the March 31, 2021 deadline as part of its budget proposals.
It is also planning to double the ticket size of the loans for which the interest subvention is given to Rs 2 crore. The money is lent by scheduled banks to micro, small and medium enterprises as term loans or working capital loans at reasonable rates of which the Government underwrites two per cent of the interest due.
Top officials said with many MSMEs struggling due to the economic depression which the country witnessed in the wake of the COVID-19 pandemic, a package for the sector was being prepared which would be announced in the upcoming budget.
Surveys of the MSME sector have shown that finance and especially working capital shortages have proved crippling for the sector, which employs more than 120 million people.
“As the MSME sector is labour intensive, accounting for 30 per cent of GDP, its revival has to be given priority as it not only helps the GDP recover but also reduces the unemployment rate which shot up due to the Covid induced lockdown,” officials said.
India’s unemployment rate is nearly 8 per cent and the majority of fresh industrial employment that will be created in the year ahead is expected to be in the MSME sector.
“Our focus in the package for the budget will be on supporting them financially, besides reducing their compliance burden on various accounts including GST and industrial laws,” officials explained.
The government will also step up spending on infrastructure for MSME industrial clusters and for skill enhancements and technological upgradation for this sector.