Union Budget 2023: Revamped MSME credit guarantee scheme to start on Apr 1

New scheme likely to lower cost of credit by 1%, allow MSMEs to avail addl collateral free credit guarantee of Rs 2 trn

Giving a push to the 63 million micro, small and medium enterprises in India, finance minister Nirmala Sitharaman on Wednesday announced a revamped Credit guarantee scheme for MSMEs with effect from April 1 this year. This may see an infusion of around Rs 9,000 crore into the corpus.

The new credit guarantee scheme is expected to lower cost of credit by 1 per cent and allow MSMEs to avail additional collateral free credit guarantee of Rs 2 trillion. The MSME segment accounts for 30 per cent of GDP and employs nearly 110 million people.

According to a recent study by Small Industries Development Bank of India (Sidbi), some 65 per cent of the MSME players in the country had availed benefits under the Emergency Credit Line Guarantee Scheme (ECLGS). The study was based on a random sample pool of 1,029 MSMEs across 20 states and two Union Territories.

Various other measures to support MSMEs were announced in the Budget, including extension of ECLGS till March 31, 2023, additional credit of Rs 2 trillion for Micro and Small Enterprises to be facilitated under CGTMSE, and the rollout of a Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6,000 crore.