World Bank clears $750mn aid for MSMEs

THE PROGRAMME WILL ADDRESS THE CURRENT LIQUIDITY AND CREDIT NEEDS OF SOME 1.5 MN VIABLE MSMES

NEW DELHI: The World Bank on Wednesday approved a $750million programme for micro, small and medium enterprises (MSME), a key economic sector crippled by Covid-19.

Given uncertainties related to Covid-19, lenders remain wary about MSME borrowers’ ability to repay. This resulted in a serious cash-flow problem to even viable enterprises in the sector, the bank said on Wednesday.

“The MSME Emergency Response programme will address the immediate liquidity and credit needs of some 1.5 million viable MSMEs to help them withstand the impact of the current shock and protect millions of jobs,” the bank said.

The World Bank’s MSME programme will support the government’s initiatives by “de-risking” lending from banks and non-banking financial companies to MSMEs through a range of instruments, including credit guarantees.

“The immediate need is to ensure that the liquidity infused into the system by the government is accessed by MSMEs. Equally important is to strengthen the overall financing ecosystem for MSMEs,” said Junaid Ahmad, World Bank Country Director in India.

The MSME sector, the backbone of Indian manufacturing, account for 29% of the country’s gross domestic product (GDP), the widest measure of a country’s income growth, according to official data. Small enterprises also account for 40% of India’s exports and employ over 150 million people.

The sector has been hit by a sharp fall in revenues due to lack of cash, cancelled orders and supply-chain disruptions from Covid-19.