Table of contents:
- Introduction of union budget 2024-25
- Announcements for MSMEs
- Conclusion
The Union Budget 2024-25 has introduced several key initiatives aimed at bolstering the Micro, Small, and Medium Enterprises (MSME) sector. These announcements by the finance minister (Smt. N. Sitharaman) reflect a comprehensive approach to enhancing financial support, credit access, and market opportunities for MSMEs.
Read more: 2024 Budget highlights for Infrastructure sector in india
source: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2035589
In addition to the finance allocation and initiatives given in the interim budget (feb-2024) already, here are the few significant announcements for MSMEs:
1. Credit Guarantee Schemes
The finance minister announced the continuation and enhancement of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This scheme offers collateral-free credit to MSMEs, providing a guarantee cover of up to Rs. 100 lakhs.
The scheme aims to stabilize lender risks and promote financial inclusion for small businesses. Additionally, member lending institutions now offer specialized services, including personalized banking and supply chain assistance, to further support MSMEs.
2. New Assessment Model for MSME Credit
A revolutionary assessment model for MSME credit was proposed, which leverages the digital footprint of MSMEs in the economy. This model is a departure from traditional assessment criteria such as assets and turnover, focusing instead on a more holistic evaluation of an MSME’s economic activity. This change is expected to make credit more accessible and tailored to the unique profiles of MSMEs.
3. Mudra Loan limit increased to 20 lakhs
In a significant boost to the Pradhan Mantri Mudra Yojana, the finance minister announced an increase in the Mudra loan limit from Rs. 10 lakhs to Rs. 20 lakhs for those who have successfully repaid previous loans. This initiative not only increases the financial support available to MSMEs but also integrates comprehensive support systems, including online financial literacy programs and entrepreneurship development schemes.
4. Reduced Turnover Threshold on the TReDS Platform
The Ministry of MSME has lowered the turnover threshold for mandatory onboarding on the TReDS platform from Rs. 500 crore to Rs. 250 crore. This change aims to include more medium-sized enterprises, enhancing their access to financial resources.
5. Expansion of SIDBI Branches
To enhance credit access for MSMEs, 24 new SIDBI branches will be opened in MSME clusters over the next three years, expanding the total coverage to 168 clusters. This strategic move aims to provide localized support and easier access to credit for small businesses across the country, facilitating their growth and development.
6. E-commerce Export Hubs
The government plans to establish e-commerce export hubs in Public-Private Partnership (PPP) mode for MSMEs and traditional artisans. These hubs will facilitate the sale of products in international markets, aiming to boost the share of MSME-specified product exports. The initiative comes in light of the recovery in MSME exports, which have risen to 45.74% in FY24, and aims to further enhance the global competitiveness of Indian MSMEs.
7. PMGSY Scheme – 4th Phase
The fourth phase of the PM Gram Sadak Yojana (PMGSY) will be launched to provide all-weather roads to 25,000 rural habitats. This initiative aims to enhance rural infrastructure and connectivity.
8. Jan Samarth-based Kisan Credit Card
The finance minister mentioned about Jan Samarth-based Kisan Credit Card will be introduced in five states, aiming to improve financial inclusion and support for farmers, while talking about the promotion of digital public infrastructure for agriculture in partnership with state governments.
9. PM Svanidhi Scheme for Street Vendors
Building on the PM Svanidhi scheme for street vendors, a new initiative will be launched over the next five years to promote 100 weekly haats (markets) in select cities. This initiative is designed to provide better market access and support for street vendors.
Conclusion
These initiatives collectively aim to strengthen the MSME sector by improving access to credit, introducing innovative assessment models, expanding financial support, and promoting global market integration. The government’s continued focus on MSMEs underscores their crucial role in driving economic growth and employment in India.
These announcements from the Union Budget 2024 highlight a proactive approach to addressing the needs of MSMEs and fostering an environment conducive to their growth and sustainability.
A product manager with a writer’s heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.
The increased limit on the MUDRA loan is going to uplift so many small businesses who really need a big financial boost to to upscale their operations. The government has done good to further improve assistance to MSMEs. The industry will definitely benefit from this.
Govt has to launch something, but benefits to businesses are still a challenge on the grounds. Due to human intervention, getting a loan is just like dream for them.