The World Bank Board of Directors has approved a $ 500 million program to support India’s national initiative to revitalize the MSME sector, which has been hit hard by the COVID-19 crisis.
According to a statement released last Friday, the program aims to improve the performance of 555,000 MSMEs and is expected to mobilize funding of USD 15.5 billion, as part of the government program of USD 3.4 billion for the competitiveness of MSME – A Post-COVID Resilience and Recovery Program (MCRRP).
The $ 500 million Micro, Small and Medium Enterprises (MSMEs) Performance Enhancement and Acceleration Program (RAMP) is the World Bank’s second intervention in this sector, the first being the Intervention Program of $ 750 million MSME Emergency, approved in July 2020 to address the immediate liquidity and credit needs of millions of viable MSMEs severely affected by the ongoing COVID-19 pandemic.
âTo date, 5 million businesses have accessed government program funding. With the program approved today, World Bank funding to improve the productivity and financial sustainability of the MSME sector amounts to $ 1.25 billion over the past year, âthe statement said. .
âAfter supporting the immediate liquidity and credit needs of viable MSMEs in the first phase, the RAMP program will support the efforts of the Indian government to increase the productivity and financing of MSMEs in the economic recovery phase, attract financing from the sector. medium-term private sector, and tackle long-standing financial sector issues that constrain the growth of the MSME sector, âhe added.
According to the statement, the MSME sector is the backbone of the country’s economy, contributing 30% of India’s GDP and 40% of exports. Of some 58 million MSMEs in India, more than 40 percent do not have access to formal sources of finance.
âThe MSME sector, a vital pillar of the Indian economy, has been hit hard by the Covid-19 pandemic,â said Junaid Ahmad, World Bank Country Director in India. “The RAMP program will step up efforts to help businesses return to pre-crisis production and employment levels, while laying the groundwork for long-term productivity-driven growth and job creation. essential in the MSME sector. “
The RAMP program will provide better access to finance and working capital for MSMEs by strengthening debt finance markets; and intensify online dispute resolution mechanisms to resolve the problem of late payments. These efforts are expected to improve the cost-effectiveness, quality, accessibility, impact and reach of these programs.
âThe MSME sector in India faces several challenges. There is a need to strengthen access to formal sources of financial and non-financial services, including women-led MSMEs, and to strengthen coordination in national and state MSME support programs. Given the scale and geography spread across the country, direct interventions can be prohibitively expensive, âsaid Peter Mousley, Senior Private Sector Specialist and World Bank Task Team Leader for the program.
âThe RAMP program will support the government’s MCRRP goal of providing a more comprehensive and coordinated Central State approach to improve the productivity of the MSME sector, reduce the gender gap and promote more gender-friendly investments. ‘environment.
The loan of $ 500 million from the International Bank for Reconstruction and Development (IBRD) has a maturity of 18.5 years, including 5.5 years of grace period.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)