Time has proved that Micro, Small & Medium Enterprises (MSME) are key to the Indian economy. Not only have they contributed a significant portion to India’s GDP, they also employ millions of people, which makes them the second largest workforce employer in the country. The first being the agricultural sector.
However, ability to provide this much support to the economy does not make MSMEs less vulnerable to the unfair weather impacting businesses worldwide. Thanks to the Indian government which has come to rescue the ailing economy due to the worldwide slowdown and economic downturn following the COVID-19 pandemic.
In order assist the Indian economy to recover from the inadvertent crisis of economic slowdown, Prime Minister Narendra Modi and his government have come up with a unique plan – The Atmanirbhar Bharat Abhiyan. It is an effort to make India self-reliant and self-sufficient, independent in every aspect so that its dependence on other nations can be brought to a bare minimum level.
Idea behind Atmanirbhar Bharat Abhiyan
So, what exactly is Atmanirbhar Bharat Abhiyan? Atmanirbhar is a Hindi word which translates to self-reliance in English but this word encompasses a whole lot in it. It is, in fact, a whole ideology in itself, an impetus which will ultimately place India at a level which is, although, only perceivable at this juncture but is highly achievable. In totality, not only the scheme will make India truly India but it will also help Indians make India prosper through Indian brands, products and services. It will also encourage Indians to prefer and buy Indian. Apart from this, the scheme also proposes a variety of measures for every sector specially the MSMEs.
Atmanirbhar Bharat Abhiyan – Relief Package for MSMEs
The relief plan proposed under this scheme aims to give big boost to the MSMEs in India. In fact, the very idea of making India truly self-reliant has its roots deep seated in strengthening Indian MSMEs. Reason: MSMEs are the closest to the population and are at the root of the pyramid employing people locally, producing locally and selling locally and that too at the most minimized cost. Thus, strengthening MSMEs is the first thing that the Abhiyan seems to have targeted in order to achieve the larger goal of making India truly self-dependent.
Modi Government Schemes help MSMEs
Finance Minister Nirmala Sitharaman had recently announced several modifications in the classification of Micro Small and Medium Enterprises. Considering MSMEs to be an integral part of the Atmanirbhar Bharat Abhiyan, she also announced various measures for the ailing and struggling MSMEs. Chief among these measures include collateral-free loans. A total of Rs3 lakh crore have been allocated under the scheme for such loans to the MSMEs. These loans will be wholly backed by government and MSMEs will have the ease of repaying the dues within next 45 days and it will also have a moratorium facility.
Redefinition of MSMEs
The minister also presented the redefinition of the MSMEs and the new definition is being perceived as a great opportunity for the MSME sector to grow and emerge as one of the most important sectors in the Indian economy.
New Benefits for MSMEs under Atmanirbhar Bharat Scheme
The scheme proposes Emergency Credit Line. This will be targeting Businesses and MSMEs which will be provided loans by banks and non-banking finance companies (NBFCs) up to 20% of entire outstanding credit. The eligibility criteria for such loans is that those with Rs25 crore outstanding and having a turnover of Rs100 crore annually will be able to avail the benefit under this scheme.
Best Part of the Loan Scheme for MSMEs
The best part of these loan schemes for MSMEs is that these will have a tenure of 4 years or 48 months and with it there will be a 12-month moratorium on the repayment of the principal amount. Besides, the interest will also be capped. There will be full credit guarantee by the government on principal as well as interest. The last date to avail benefits under this scheme is October 31, 2020. Furthermore, MSMEs need not give any fresh guarantee or fresh collateral for such a loan.
Allocation of Funds for the Loan Scheme for MSMEs
The scheme allocates Rs20,000 crore in the form of subordinate debt for MSMEs which are either no profit assets or have been stressed. In addition, it also allocates an equity infusion of Rs50k crore through funds of funds. Apart from these, the government has also debarred any global company from procuring government tenders up to Rs200 crore. This will encourage the local players to walk an extra mile, and try to procure government tenders.
Even A Little Help, Helps MSMEs To Go the Extra Mile
Small enterprises work on low budget and are majorly cash-strapped, practically always! Even a small push and an economic infusion at the right time could help them deliver more than what they can. Such is the power of MSMEs as they operate in a way to minimize input and maximize output. As low budget enterprises, MSMEs often lack collaterals or big assets to lure banks to grant them loans. This often makes them more vulnerable in times of crisis. Often MSMEs fail to cope up and die down. In order to grow, regular and timely credit infusions seem must for any business. When MSMEs fail to get credit support from banks, they often fail, turn NPA and often are forced to wrap-up. But with the new scheme in force, it seems that more small enterprises will have greater chances of survival and growth.
Abhiyan – A Boon to The MSMEs
The new scheme has a two-pronged approach. On the one hand, it targets at encouraging MSMEs to step up and think big, while on the other hand, it also lends a helping hand to them in the form of collateral-free loans to realize the dream of being big players. Apart from that, MSMEs and Indian enterprises will have an ample opportunity to procure government tenders up to Rs200 crore which were earlier often grabbed by bigwig global players.
MSMEs honored to help India become Atmanirbhar
Small enterprises work on a very small budget and they do not target much and work even when the profit margin is less. This is what differentiates them from big firms which largely target big profits and only profits. On the other hand, it is a subject of honor for MSMEs to be able to help in making India self-reliant Bharat.