World Bank approves $500M programme to uplift Indian MSMEs
This initiative targets to improve the performance of 555,000 MSMEs and is expected to mobilise financing worth $15.5 billion, according to World Bank.
In a bid to uplift and revitalise the micro, small and medium enterprises (MSMEs), the World Bank's Board of Executive Directors today approved a $500 million programme (Raising and Accelerating Micro, Small and Medium Enterprise Performance programme) which targets 555,000 MSMEs to improve the performance and is expected to mobilise financing worth $15.5 billion, as part of the government’s $3.4 billion MSME Competitiveness – A Post-COVID Resilience and Recovery Programme (MCRRP).
This is not the first time the institution has extended monetary help to the sector to combat the consequences of the coronavirus pandemic. In July last year, the World Bank approved $750 million under the MSME Emergency Response Programme.
Commenting on this development, Junaid Ahmad, World Bank Country Director in India, said,
"The MSME sector, a critical backbone of India’s economy, has been hard hit by the COVID-19 pandemic. The RAMP programme will intensify efforts to support firms to return to pre-crisis production and employment levels, while laying the foundations for longer-term productivity-driven growth and generation of much-needed jobs in the MSME sector.”
According to the company statement, the programme will initiate its activities in five states — Gujarat, Maharashtra, Punjab, Rajasthan, and Tamil Nadu. Going forward, it will include additional states in the programme.
The World Bank Group, including its private sector arm — the International Finance Corporation (IFC), will support the MSME sector under the programme by setting up MSME Council to enable better coordination between national and state-level programmes. It will promote technology-based solutions, green investments, and access to services for women-headed businesses, among other measures.
The $500 million loan from the International Bank for Reconstruction and Development (IBRD), has a maturity of 18.5 years, including a 5.5-year grace period.
While this sector was overcoming the challenges posed by the first wave, the second wave struck like a tsunami, bringing everything to a standstill. The Indian MSME sector contributes about 30 percent to the country's GDP and 40 percent to exports.
Edited by Kanishk Singh