On Monday, the World Bank signed a $750 million (about Rs 5,600 crore) agreement with the Indian government for an MSME Emergency Response Programme to support the increased flow of finance into the hands of small businesses severely impacted by the COVID-19 crisis.
The programme will address immediate liquidity and credit needs of nearly 15 lakh viable MSMEs (micro, small, and medium enterprises) impacted by the current shock from the coronavirus pandemic and protect millions of jobs. The programme is among a broader set of reforms that are needed to propel the MSME sector, a significant contributor to the Indian economy in terms of Gross Domestic Product (GDP), exports and employment generation.
The agreement was signed by Sameer Kumar Khare, Additional Secretary at the Department of Economic Affairs, on behalf of the government and Junaid Ahmad, Country Director (India) on behalf of the World Bank.
Khare said that the Covid-19 pandemic has severely impacted the MSME sector leading to loss of livelihoods and jobs. The government is focused on ensuring that abundant financial sector liquidity available flow to non-banking finance companies (NBFCs) and that banks which have turned extremely risk-averse continue taking exposures in the economy.
"The project will support the government in providing targeted guarantees to incentivise NBFCs and banks to continue lending to viable MSMEs to help sustain them through the crisis," he said in an official statement.