To push jobs, govt banks, on small-scale industries

Small was big for FM Sitharaman as she announced a series of measures to help micro, small and medium enterprises (MSMEs) to address their financing requirements, as they often run out of funds to meet their operational and expansion requirements, and also sought to push technological upgrade.

MSMEs are seen to be major job creators in the economy, with the 2.7 crore units already accounting for over 20 crore jobs and ties in with Modi govt’s focus on employment in the Budget.

“We have taken eight steps to address specific problems of MSMEs,” FM said at a post-Budget press conference.

A key announcement related to helping small manufacturing units tap long-term loans for purchase of machinery – without collateral or third-party guarantee. For this, a credit guarantee scheme has been proposed, which will pool the credit risk of MSME borrowers to fund purchases up to Rs 100 crore. The borrower will provide an upfront guarantee fee, with an annual guarantee fee on reducing loan balance.

“This is a major change as even a Rs 50 lakh bank loan currently takes months. Now, we can hope to get a loan quickly without collateral soon after selecting the machine. It will be a huge leap for the sector, Rs 100 crore is a milestone,” said Anil Bharadwaj, secretary general of Federation of Indian Micro and Small & Medium Enterprises (FISME).