India’s effort to revitalise its crisis-ridden MSME sector, which has been reeling under the impact of second wave of covid pandemic, will get a major boost as the World Bank has approved a USD 500 million program for the initiative.
According to a press statement released by WHO last Friday, the program targets targets improvements in the performance of 555,000 MSMEs and is expected to mobilize financing of $15.5 billion, as part of the government’s $3.4 billion MSME Competitiveness – A Post-COVID Resilience and Recovery Programme (MCRRP).
The MSME sector is the backbone of the India’s economy, contributing 30% of India’s GDP and 4% of exports. Out of some 58 million MSMEs in India, more than 40 percent lack access to formal sources of finance.
The USD 500 million Raising and Accelerating Micro, Small and Medium Enterprise (MSME) Performance (RAMP) Program is the World Bank’s second intervention in this sector, the first being the USD 750 million MSME Emergency Response Program, approved in July 2020 to address the immediate liquidity and credit needs of millions of viable MSMEs severely impacted by the ongoing COVID-19 pandemic.
“To date, 5 million firms have accessed finance from the government program. With the program approved today, the World Bank’s financing towards improving the productivity and financial viability of the MSME sector amounts to USD 1.25 billion over the past year,” the statement said.
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“The MSME sector, a critical backbone of India’s economy, has been hard hit by the Covid-19 pandemic,” said Junaid Ahmad, World Bank Country Director in India. “The RAMP program 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.”
