According to Comvision India Managing Director and FICCI CMSME Vice President Harjinder Kaur Talwar, the credit guarantee initiative, a self-funding guarantee fund, marks a fundamental shift in MSME finance.
It does away with the need for collateral or third-party guarantees and allows term loans of up to ₹100 crore per applicant for the purchase of machinery and equipment.
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A comprehensive plan to support India’s Micro, Small, and Medium-Sized Enterprises (MSMEs) and position them as important engines of economic growth and job creation is unveiled in the Union Budget 2024–25. This progressive strategy introduces novel approaches to sustainable growth while addressing the industry’s long-standing problems.
The new loan guarantee program for MSMEs in the industrial sector is a noteworthy feature. With the help of this ground-breaking program, applicants may now acquire machinery and equipment with term loans of up to ₹100 crore without the requirement for collateral or third-party guarantees. A major change in MSME finance may be seen in the self-financing guarantee fund, which was established by pooling credit risks.
Public sector banks will also be examining MSME credit evaluations. Banks will transcend conventional asset- or turnover-based evaluations by creating new models based on digital footprint scoring and enhancing their internal capabilities. This strategy aims to expand the extent of financial inclusion by including MSMEs without conventional accounting systems.
Acknowledging the instability that small enterprises encounter, the budget includes a system to assist MSMEs in times of financial strain. This program keeps MSMEs in the “special mention account” (SMA) stage of bank financing accessible and keeps them from becoming non-performing assets (NPAs). This policy, which is supported by a government-sponsored fund, offers an essential lifeline for operational viability.
With funding for 50 multi-product food irradiation units and 100 NABL-accredited food quality and safety testing facilities, the food processing industry is given special consideration. Through enhancing food safety and quality, these initiatives seek to support MSME enterprises operating in the food processing industry.
These policies targeted at MSMEs are a component of a larger economic plan. The administration continues to project an optimistic 10.5% GDP growth rate while exhibiting fiscal restraint by lowering its deficit target to 4.9%. An “incentive-linked employment” program is also introduced in the budget to create millions of new jobs and boost consumer spending. The budget allocates about ₹3 trillion for programs that support women and girls, demonstrating its strong emphasis on increasing women’s involvement in the workforce. The government’s dedication to economic development and gender equality is demonstrated by this large expenditure.
Important obstacles to women’s professional advancement will be addressed by actions like forming working women’s hostels in partnership with businesses, putting up creches, launching skill-building programs specifically for women, and encouraging market access for businesses managed by women’s Self-Help Groups (SHGs). These initiatives may encourage more women to pursue career opportunities.
These actions seek to eliminate obstacles that have historically prevented women from advancing their careers and to foster a more welcoming workplace. The budget contributes to gender equality by encouraging women to enter the workforce at a higher rate and by accessing a substantial source of potential economic growth.
In summary, this budget embodies a revolutionary strategy for economic growth, emphasizing both the expansion of MSME’s and the empowerment of women. By implementing extensive regulations for MSMEs and establishing networks that assist women in the workforce, the government hopes to promote economic expansion, increase job creation, and cultivate a more varied and inclusive economy.